Cheap Auto Loan Financing

Whether you're buying your first car, replacing an older vehicle, or buying a car that offers better fuel economy than your current ride, one thing you definitely need is an auto loan you can afford, with a term that doesn't outlive the car you're financing. Here's how to find the cheapest auto loans:

  • Credit Matters: The best rates on car loans require excellent credit scores. While there are still loans available for those with "dented" credit, scores of 680 and up are the ideal, while buyers with scores of 720 and higher are pretty much guaranteed the lowest interest rates and highest loan amounts. If you don't know your credit score, find out what it is before you shop for a loan, and, if necessary, spend time improving your credit score before you begin the auto purchase process.
  • Do your Homework: Just as it's best to arrange financing before you shop for a car, you should do some research before you sit down with a loan officer. You'll want to compare offers from several different lenders, including banks, credit unions, and even car dealership finance desks, and you'll want to look not just at the interest rate, but also the term (the number of months you'll be repaying the loan), and any fees included. The internet is an excellent way to do this, either by visiting individual websites, or by going to sites that specifically address auto loan hunters. Most of the time, you'll find that independent lenders, like credit unions, have the best rates, and dealer financing tends to be the most expensive.
  • Make a large down payment, or trade in an old car: One way to make a loan cheaper is to make it smaller. You can do this with a trade-in, where your existing car gives you "credit" against the price of a new vehicle, or by increasing the size of your down-payment.
  • Consider a Lease: If your credit scores aren't quite what they should be, or if you're intimidated by the size of the payments for the car you have your heart set on, consider a lease instead of a loan. You must still have a down payment, but the payments are typically considerably lower than those for regular loans.

Signing the papers for an auto loan can be daunting, but if you've done the research, and have good credit scores, you will be able to begin car shopping knowing you've found the best financing available for you.