Low Rate Car Loans
First and foremost to remember when looking for a low rate car loan is to find your own financing and stay away from the dealership type loans. Many people don't realize that for the convenience of one stop shopping, you often will pay the dealership an additional kickback from the financing company. Even if the car dealership handles their own financing, the rates will undoubtedly be higher. You may not even be aware that you are being charged extra.
Dealerships may be perfectly willing to offer you a super purchase price on an automobile, but only if you finance through the dealer. That should make you stop and think in it. If a dealer is willing to come down a lot on the purchase price when you finance through the dealership, you can rest assured the money is being made up on the kickback from the lender.
Even zero percent loans can be a bad deal, because they are often provided as a choice between a large discount and a zero percent loan through the dealer. To begin with, you must have very high credit scores in order to get this type of loan offer. You may wonder how a zero percent loan can be bad. If you calculate the savings by the discount in comparison with the interest rate difference, you will find that the discount with standard interest rate will cost you less than the zero percent loan rates.
So, if you leave the dealership auto loan offers behind, where can you find low rate car loans? The first place to check is the internet. You will often find auto loan brokers which will provide several loan offers and you will only need to fill out the paperwork once. Better yet, the decision usually requires only a few minutes. Some of the sites are a little pickier about credit than others though, so you'll want to read the fine print carefully.
Another good source for low rate car loans is your local credit union. Their rates are usually quite reasonable and they may be less stringent about your credit rating. They are not a bank and they are not associated with dealers, so you aren't paying for kickbacks.
If you own your own home and have equity it, a home equity loan is often an excellent source for a low rate car loan. An additional advantage to the home equity loan is that the interest is tax deductible which can save you additional big dollars on the loan.
If none of the other sources have worked for you, then you still have the option of going to your own bank. Their rates are likely to be slightly higher, but if you have a checking or savings account there as a known customer you'll be more likely to be approved. With the bank, you won't be paying extra fees or points to the dealer for the privilege of the loan. If you have a savings account or a Certificate of Deposit, you may get lower rates still by using it as collateral.
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