Doing a little bit of homework on interest rates before you go car shopping can pay off dividends. To help you get started, we’ve included several key factors that determine the interest rate for your auto loan.
This probably goes without saying, but as a rule, the better your credit rating the lower your interest rate will be. If you know you’re going to need financing for your next car, go ahead and start improving your credit now.
Interest rates on new cars are generally lower than used cars. Older used cars tend to carry the highest rates. Some new cars even offer zero percent loans to qualified buyers.
These days it’s most common for auto loans to be financed over 60 months. While this is becoming standard, you can typically get a lower interest rate if the term is shorter (two or three years).
Credit unions, banks and the automakers are the three most common lending options. Depending on what kind of car you’re buying, one of these financiers may deliver a better rate. It’s best to explore all three and choose the lowest rate.
We’ve given you a start. It’s time for you to take these continue doing your research. Take your time, do your homework and make the choice on your terms. Happy shopping!