New Car Loan Rate

New car loan rates can vary significantly, depending upon an applicants credit score and what lender can offer. Even a small difference in interest rates can significantly affect monthly payments and the total interest paid over the life of the debt. Knowing how to find the best new car loan rate can help consumers get the automobile of their dreams for the best possible price.

Before someone can begin shopping for a new automobile and lending sources, it is important for to consider ones credit score. Potential buyers should obtain a free copy of their credit report from one of the major credit reporting agencies and check it for inaccuracies. If any problems are found, they should follow the necessary procedures to get them corrected immediately. The strength of an applicants credit score determines the new car loan rate he or she can qualify for. Most financial institutions tier their new car loan rates, offering the lowest rates to those with the best credit, so it pays to make sure ones credit report is as clean as possible.

Many people choose to avoid the additional work of obtaining lending from a bank or credit union and opt to finance their vehicle through the dealer. This convenience comes at price since automobile dealers will typically offer a new car loan rate higher than what could be obtained at a bank. Most dealers work through banks to set financing, so they simply add a percentage point or two on all new car loan rates to make themselves a profit. Consumers can cut out the middleman and go to a bank themselves and save the additional interest charge.

Most experts agree that you will get the best lending rates from banks or credit unions, not dealers. Using online banks and rate services, consumers can quickly check the new car loan rates for numerous lenders at one time. Many institutions will respond to online applications within the hour. If approved, the applicant will receive essentially a blank check to use when shopping for any vehicle but are under no obligation to use it if they do not find the automobile they are looking for. This enables buyers to work with the dealer as a cash buyer and eliminate new car loan rate negotiations altogether.

Consumers need to become empowered buyers and carefully research all loan options before they negotiate car prices with a dealer. Buyers should also seriously consider securing financing through a bank or credit union so they do not have the additional stress of negotiating this aspect of the purchase through the dealer. Dealers will often inflate their loan packages or pad them with unwanted options like extended warranties, so avoiding the lending negotiations process with a dealer is often the wisest move of all. "Teach me good judgment and knowledge: for I have believed thy commandments" (Proverbs 119:66).
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