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Just be sure that you are also comparing the same type of loan. The shorter the loan, the lower the rates. Including a down payment can also improve your rates since it will improve your credit standing.
Budget Your Monthly Payment
Your monthly payment should also be considered when shopping for a car loan. A longer term loan can reduce your monthly payment, even with higher rates. Also, budget the costs of insurance and maintenance for your vehicle.
Lower payments are appealing, but a shorter term loan can save you hundreds, even thousands in interest costs. Take a car loan for $25,000 at 6%. Interest costs tally at $5,677.64 for a seven year loan, but only $3,999.20 for a five year loan. That's a savings of $1,678.44.
Look For Flexibility In Paying Sellers
Who do you want to purchase your vehicle from - a dealership or a person? Will it be a new or used car? Many lenders want to know your answers to these questions. Some financing offers limit who you can buy from. Others offer a blank check to sign over to whoever you choose.
Before you apply for a loan, make sure you know what type of car you plan to buy. If you are unsure, keep your options open by finding a flexible car loan. While you may find lower rates for purchasing from a dealership, you may also miss out on a deal in the classifieds.
No matter what type of auto lender you pick, apply early for pre-approval. Not only will you find out how much you qualify for, but you can also close quicker on a deal.
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