How to Compare Loans for the Best Rate

Along with the housing credit crisis and changes you may have seen to the way your credit card banks are acting toward you and setting terms, auto loans and their lenders have changed somewhat in the last year as well. Becoming much more competitive and selective in deciding who they will offer money to for an auto loan, banks and credit unions have stepped up their game when it comes to car loans. Responsively, wise consumers will likewise step up their games when it comes to evaluating and accepting loan offers. Despite the increased difficulty in attaining loans, that doesn’t mean that you have to go as a beggar, accepting any crumb that is thrown at you.

Using Tools to Find the Best Rates

Without a doubt, the Internet is the biggest and best tool you can hope for when it comes to finding great rates for auto loans. Any lender worth their salt already has a complete website up with the information you need to decide if they can provide you with a quality loan at a good rate. If you don’t want to waste your time filling out endless applications at various sites, there are others that will allow you to fill out a single application and automatically receive quotes from many different banks that are interested. If you choose the lender-by-lender method, you should make sure you get a minimum of three to four quotes before you begin your comparison for the best rate.

What Does the Best Rate Look Like?

If you think that one loan which offers 5.7% is better than a loan that offers 6.6% without any further information then you have come to the right place to learn the error of your ways. The best rate for an auto loan isn’t always going to be the one that jumps out at you as having the lowest APR (annual percentage rate). Car loans are traditionally offered for repayment in 1 year increments starting from 3 years, to now 7 years and how long a loan term will be is an important part of its overall rate. Would you rather pay 3% over six years or 6% over three years?

Don’t be so quick to decide. Over the life of the loan the shorter loan would be more expensive. The reason why it is important to know this is to not go in guessing when you are deciding which loan rate is the best. Keep handy an online car loan calculator that will show you not only what your monthly payments will be, but also what the total interest you will pay for a loan is. Many customers have been, are being today and will be in the future sucked into a loan that is actually more expensive than another one they had been offered because they did not know that the best rate isn’t always the one with the lower interest attached to it.

Negotiating the Better Rate

You will learn something interesting about auto loans – any type of non-revolving loan, in fact, if you shop for one long enough: The more you put down, the lower your interest rate offer will be. When comparing rates, you should also seriously compare what rates are possible for you if you increase your down payment all the way up to 20% of the car you wish to buy and then some if possible. The higher you go, the farther down your interest rate will drop.