How To Get A Great Auto Loan

Reviewed: August 29, 2016
By FinanceWeb

When most consumers think about buying a new car, they will spend countless hours searching for ways to get the best deal on a vehicle. However, many of them fail to do the proper research in order to get the best deal on an auto loan as well. If you do not visit a dealership with a loan already in place, then you are going to be leaving yourself in a vulnerable position and may have to accept any terms the dealership offers you in order to secure the loan. This could mean you will end up in a loan with a higher interest rate then you could have secured elsewhere. Ultimately, you will want to secure a loan that has monthly payments you can easily afford. One way to find what payment you can afford is through the use of an online auto loan calculator.

Pay Attention To The Loan’s Total Cost

The key to getting the best auto loan is finding one that has a low annual percentage rate (APR). A low APR can give you significant savings on the total cost of the loan. Using an online auto loan calculator can help you see the difference in costs that higher and lower APRs offer over the course of a loan.

Another top consideration when searching for a loan should be the term of the auto loan. The term of the loan can really affect both the monthly payment and how much the total cost of the loan will be. Shorter term loans with higher monthly payments will result in a lower cost overall for the loan. Longer term loans mean a higher cost for the loan overall.

Where To Shop For Auto Loans

After spending some time using an online auto loan calculator to see how much loan you can afford and what type of monthly payments you can afford, then it is time to do some auto loan comparison shopping. There are many places to find auto loans at. For some people, finding a great loan can be as simple as doing a quick search online.

Local Banks- If you have good credit, then a local bank might be a great choice. They typically offer their customers very specific and conservative auto loan policies. Also, banks are in a good position to offer very competitive auto loan rates.

Local Credit Unions- A credit union usually operates similar to banks, but they typically only offer loans to their members. Members are also owners of the credit unions themselves. Because of the fact that credit unions are operated as a nonprofit, their costs for operating are very low compared to banks and this can lead to very competitive auto loan offers. Many customers belong to a credit union for the simple fact that they are able to apply for these convenient and competitive loans.