How to get the best auto loan quotes
The key to getting a good deal on a auto loan is shopping. You’ll want to compare rates from multiple lenders, as well as fees and other costs, to ensure you select the best quote. Your income, current debts, and credit score will all play a part in what you qualify for.
So don’t rush into a loan. Careful preparation could help you save thousands of dollars over the life of your loan.
6 Steps to Getting the Best Auto Loan Quotes
Auto loans represent a big financial commitment. To keep things under budget — and still snag your dream car — follow these steps when finding quotes.
1. Review your credit report and note in advance
This first step is crucial. If you don’t already know, check your credit score before you start applying. This will guide you to the lenders you qualify for and avoid rejections.
It will also help you understand the potential auto loan rates you may receive. If your credit rating is high, you are more likely to get lower rates. Likewise, a lower credit score or a history of missed payments can lead to higher rates.
Either way, reviewing your credit report and score will help you choose lenders. And once you know your potential monthly payment amount, you can also find cars within your budget.
2. Get quotes from lenders you already work with
Already have a mortgage or personal loan? A long-term relationship with a bank or credit union? Use them to your advantage.
Lenders with whom you have a positive track record may take this into account when applying for an auto loan. This could mean an easy application process, but it could also lead to lower rates. It’s unsecured, of course, but borrowing from a lender you already use may mean you pay a little less in the long run.
3. Buy locally before going to a big bank
local banks and credit unions are a good place to start if you don’t already have a regular lender. The big banks advertise lower rates, but they are more difficult to obtain. Local lenders generally have less stringent criteria, such as income levels and credit scores, than their national counterparts.
The downside is that it may mean a waiting period. Some credit unions and smaller banks require you to open an account. Then you may have to wait a few weeks to a few months before you can apply for an auto loan.
This isn’t always the case, but review the fine print to be sure. If you’re not desperately needy, it’s probably worth the wait to make a more economical decision.
4. Apply to multiple lenders
Although you should definitely start locally, don’t limit your options. A car loan will only count as one application on your credit file, even if you send applications to dozens of lenders. But this is only true if you apply within 14 days.
The more applications you submit to lenders, the more flexibility you will have. This is the best way to ensure you get a solid quote for a car loan. If you’re vying for a certain loan amount or competitive interest rate, applying to multiple lenders is the surest way to get there.
Many lenders also offer 30 days of pre-approval to shop with. So, once you apply, you’ll have time to choose the best option for your finances and research the dealerships for the right car.
5. Look carefully at fees
It’s not just about interest rates or monthly payments. Lenders may charge additional fees, such as origination or prepayment charge – on a loan. This can mean less money to spend on a vehicle or a penalty if you decide to make additional payments towards the principal.
Other fees, such as late payment fees, are also important. Consider what other expenses might contribute to the cost of your loan when you receive a quote from a lender.
6. Negotiate with the dealer
Once you’ve received quotes from lenders, see what the dealer has to offer. Be prepared to reject add-ons like gap insurance or extended warranties. Instead, try to get to the heart of the loan: the interest rate, fees, and total cost should be at the forefront of your discussion.
Dealers tend to charge interest to make money. But sometimes dealers are able to offer you a more competitive rate – if you already have online financing. If you’re offered a better quote, there’s no reason not to take it. And if the dealer can’t match it, you won’t have to take a bad loan.
Don’t Ignore Other Parts of the Car Buying Process
Of course, a good quote is not the key to buying a car. There are several other ways to cut costs while walking away with a deal.
- Research local dealerships to find ones with good reviews and a full inventory.
- Compare prices on sites like Edmunds or Kelley Blue Book (KBB) if you are buy a used car.
- Check out current manufacturer deals and offers if you’re buying a new car.
- Pay attention to differences between versions, such as safety features, fuel economy and technology.
- Select two or three models that you would be interested in testing before the dealership.
The bottom line
It’s hard to overstate the importance of researching quotes when buying a car. You will probably spend over $20,000 or more. Getting the lowest possible interest rate is therefore worth it.