How to Get the Best Auto Loan Rates
In the market for a fresh or used car? If you’re planning to finance that purchase, you’re very likely wondering how to get the best auto loan rate possible. After all, your car loan rate directly impacts your monthly payments and how much money you’ll spend on interest.
But what is a “good” annual percentage rate (APR) for a car loan? Recently, average fresh car loan interest rates have ranged from about two to five percent, depending on the lender, term (length of loan), type of vehicle (fresh or used), down payment, credit score, and other credit and vehicle characteristics. Add to that potential financing fees or interest markup, and your rate can truly do a number on your wallet.
Fortunately, there are some attempted and true tips for getting the lowest auto loan rates. Here are five ways to reduce your rate:
Generally speaking, the higher your credit score is, the lower your rate will be. Here are a few deeds you can take to get your credit in better form before taking out a car loan:
- Check your credit report. Look for errors and contact the credit agency about any errors
- Pay your bills on time. If you have trouble remembering, consider setting up automatic payments for the monthly minimum amount – you can always make an extra monthly payment if you’re feeling flush.
- Pay down debt. Credit utilization, or credit card balance vs. credit limit, makes up a large portion of your credit score. A general rule of thumb is keeping your credit utilization ratio below thirty percent.
An auto loan interest rate is the cost to borrow money, voiced as an annual percentage (e.g., three percent per year). It’s pretty effortless to calculate how a elementary interest rate might influence your monthly payments and total interest cost using a loan interest calculator.
APR, on the other mitt, is not so straightforward. It reflects the annual interest rate plus some of the fees the lender is charging you, so it’s a more accomplish picture of your cost of borrowing. For that reason, and because APR can often be higher than ordinary interest rate, it’s best to use APR when comparing rates on auto loans.
A dealership can be a fine place to buy a car, but it’s usually not the best place to get a car loan. Auto dealers often mark up the interest rate, charging as much as 3% more than the APR you might have qualified for with another lender. Do your homework beforehand by comparing rates at banks, credit unions and online lenders, then get pre-approved and display up at the dealer with your conditional commitment letter in mitt.
Buying a car doesn’t usually require a down payment, but making a down payment can be a good idea. One rule of thumb is to put ten percent down on a used car and twenty percent down on a fresh car, but the ideal down payment is truly the one you can afford. Generally, a larger down payment may reduce your interest rate. As a bonus, a higher down payment translates to a lower total interest cost, since you’ve diminished the amount you need to borrow. If you don’t already have a down payment saved up, it may be worth doing before pulling the trigger on your fresh car.
If you already took out a loan but didn’t get the best car loan rate, don’t despair—the rate you got when you took out the loan might not be the rate you’re stuck with forever. Lending Club makes it effortless and swift for eligible consumers to refinance their car loans online at a lower interest rate. You can check your rate in less than a minute without impacting your credit score. Lending Club estimates that borrowers on fresh loans could save an average of up to $1,350 over the life of the loan. 1
How do you lower your car payment?
If you’re more worried about getting a low car payment vs. getting the best car loan interest rate, refinancing can help you with that, too. When you refinance a car loan through Lending Club, you could be eligible to extend the term (or repayment period) and lower your monthly payments, providing you some extra cash in your pocket. Check your rate now to see if refinancing can make those payments lighter to cover.
1 Based on analysis of 300,000 consumer accounts from Q4 two thousand twelve to Q3 two thousand thirteen using credit bureau data. Assumes the consumer refinances with the lowest rate for which they are eligible and does not extend the term of the loan. Savings figure is based on a refinance from an average APR of 11.45% to an average APR of 8.2% and sixty months remaining on the term of the loan. Your actual savings may be different. A representative example of payment terms are as goes after: an Amount Financed of $Legitimate,000 with an APR of 8.20% and a term of sixty months would have a monthly payment of $366.70.
How to Get the Best Auto Loan Rates – LendingClub Blog
How to Get the Best Auto Loan Rates
In the market for a fresh or used car? If you’re planning to finance that purchase, you’re very likely wondering how to get the best auto loan rate possible. After all, your car loan rate directly impacts your monthly payments and how much money you’ll spend on interest.
But what is a “good” annual percentage rate (APR) for a car loan? Recently, average fresh car loan interest rates have ranged from about two to five percent, depending on the lender, term (length of loan), type of vehicle (fresh or used), down payment, credit score, and other credit and vehicle characteristics. Add to that potential financing fees or interest markup, and your rate can truly do a number on your wallet.
Fortunately, there are some attempted and true tips for getting the lowest auto loan rates. Here are five ways to reduce your rate:
Generally speaking, the higher your credit score is, the lower your rate will be. Here are a few deeds you can take to get your credit in better form before taking out a car loan:
- Check your credit report. Look for errors and contact the credit agency about any errors
- Pay your bills on time. If you have trouble remembering, consider setting up automatic payments for the monthly minimum amount – you can always make an extra monthly payment if you’re feeling flush.
- Pay down debt. Credit utilization, or credit card balance vs. credit limit, makes up a large portion of your credit score. A general rule of thumb is keeping your credit utilization ratio below thirty percent.
An auto loan interest rate is the cost to borrow money, voiced as an annual percentage (e.g., three percent per year). It’s pretty effortless to calculate how a elementary interest rate might influence your monthly payments and total interest cost using a loan interest calculator.
APR, on the other mitt, is not so straightforward. It reflects the annual interest rate plus some of the fees the lender is charging you, so it’s a more accomplish picture of your cost of borrowing. For that reason, and because APR can often be higher than ordinary interest rate, it’s best to use APR when comparing rates on auto loans.
A dealership can be a fine place to buy a car, but it’s usually not the best place to get a car loan. Auto dealers often mark up the interest rate, charging as much as 3% more than the APR you might have qualified for with another lender. Do your homework beforehand by comparing rates at banks, credit unions and online lenders, then get pre-approved and demonstrate up at the dealer with your conditional commitment letter in arm.
Buying a car doesn’t usually require a down payment, but making a down payment can be a good idea. One rule of thumb is to put ten percent down on a used car and twenty percent down on a fresh car, but the ideal down payment is indeed the one you can afford. Generally, a larger down payment may reduce your interest rate. As a bonus, a higher down payment translates to a lower total interest cost, since you’ve diminished the amount you need to borrow. If you don’t already have a down payment saved up, it may be worth doing before pulling the trigger on your fresh car.
If you already took out a loan but didn’t get the best car loan rate, don’t despair—the rate you got when you took out the loan might not be the rate you’re stuck with forever. Lending Club makes it effortless and swift for eligible consumers to refinance their car loans online at a lower interest rate. You can check your rate in less than a minute without impacting your credit score. Lending Club estimates that borrowers on fresh loans could save an average of up to $1,350 over the life of the loan. 1
How do you lower your car payment?
If you’re more worried about getting a low car payment vs. getting the best car loan interest rate, refinancing can help you with that, too. When you refinance a car loan through Lending Club, you could be eligible to extend the term (or repayment period) and lower your monthly payments, providing you some extra cash in your pocket. Check your rate now to see if refinancing can make those payments lighter to cover.
1 Based on analysis of 300,000 consumer accounts from Q4 two thousand twelve to Q3 two thousand thirteen using credit bureau data. Assumes the consumer refinances with the lowest rate for which they are eligible and does not extend the term of the loan. Savings figure is based on a refinance from an average APR of 11.45% to an average APR of 8.2% and sixty months remaining on the term of the loan. Your actual savings may be different. A representative example of payment terms are as goes after: an Amount Financed of $Legal,000 with an APR of 8.20% and a term of sixty months would have a monthly payment of $366.70.