New Car Loan Rates

Searching for a new car can be a lot of fun. But, the decision on how to pay for it can make the fun come to a screeching halt. We won’t claim that financing a car can be fun, but we can provide information that might take the sting out of the process.

There are a number of resources available for finding the best loan rate for your new car. Your bank or credit union should be your first stop in finding the best financing rate for your new car. If you’ve been a good customer for a number of years, they will likely go out of their way to give you a rate you like. Finance companies, online banks and financing services (online services that provide several ‘bids’ from finance companies) are also handy resources. Read the fine print and note extra fees and other ‘gotchas’ that might get slipped in.

Many new car buyers fall into the trap of negotiating only the monthly payment. Leading consumer publications regularly warn against this pitfall. Having a purchase budget before you talk numbers – even if you are financing – will help you keep your eye on the bottom line. Assuming your credit score is in the good to excellent range, you have a lot of options. Take your time, and don’t allow a salesman to pressure you into a purchase.

Once you have received a number of new auto quotes and financing rates on the car you want, use a loan calculator to find out what the monthly payments will be when figuring in the interest rate on the amount borrowed. The amount borrowed is the purchase price, minus the down payment and/or incentives (if any). Speaking of down payments, you are much better off with putting up a large down payment than not, even if the dealer offers financing incentives. The more money you put down on a car, the less money financed, the less interest paid over the life of the loan.

Financing at the dealer may not be the best deal – even with the incentives offered. The dealership may be getting a cut from the rates offered by their financing department. Some dealers will offer zero percent financing – but only if you qualify. Typically, only those buyers with excellent credit scores can qualify for these loans. Even if you do qualify, you may end up paying more for the price of the car. Read the fine print and do your homework. If you do end up financing at the dealer, be sure to negotiate vehicle price and financing separately.

Searching for new car rates should be like shopping for anything else you might buy. The goal is to get the best overall price on the car you like. If you’re financing the car, this includes the interest rate and term of the loan. Falling in love with a new car without getting the details on financing can make your love affair go sour quickly. Allowing yourself to do the proper research will prevent you from making a snap decision and help you keep your focus.