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How To Find An Auto Loan Without Getting Ripped Off

7 out of 10 Americans use an auto loan to finance their vehicle purchase. There are many financing options available to car buyers, and with a little research they can make sure they are getting the best possible deal.

What Types of Auto Loans Are There?

Dealerships, banks, and credit unions all offer auto loans. A car dealership is the most convenient option for most car buyers but also offers the highest percentage rate. Dealerships add all sorts of markups to make the interest rates as high as possible, and then sell the loan to an outside company for a financial incentive. Dealership interest rates can be so high that some states have passed laws limiting them to 20%. Dealerships are famous for pressuring people into deals.

Banks and credit unions offer low interest auto loans. Many banks offer types of auto loans, including dealer purchases, private party purchases, refinancing, and lease buyouts. A bank will not try to pressure a car buyer into purchasing extra features, offers personalizes service, and tells a buyer if they’re paying too much for their new car. They are not as convenient to use as a dealership, but they often offer better deals.

Online auto loan providers are becoming more popular as well and offer low interest rates, no financing fees, and usually no APR. Car buyers should be on the lookout for scams and be savvy when dealing with an unknown company.

How Does One Get An Auto Loan?

There are many auto loan lenders, and a car buyer must research and choose the one that fits their needs and budget the best. Different lenders offer an array of various features, including different loan lengths, varying annual percentage rates (APRs), cash back, and sometimes zero percent financing.

A buyer should be aware of their credit score, because this will greatly affect the financing deal the car dealership will offer them. Bad credit means a high interest rate on a loan. They must also decide how many months they want their loan last, because this affects their interest rate too.

Banks such as Capital One offer immediate approval for qualified buyers on their website. The service is free and doesn’t obligate a buyer to use the loan. If approved, a buyer gets a “blank check” to take to the dealership when they purchase their car. The final sale bill is written onto the check and paid to the dealership. The auto loan belongs to Capital One, and the buyer pays the bank their monthly car payments. They offer three types of auto loans: new auto loans, used auto loans, and auto loan refinancing.

Auto loans can be obtained directly from the dealership at the time of purchase as well. A buyer must be sure not to be pressured into paying more than he or she is able for a vehicle and must stay within their monthly car payment budget. Much negotiation occurs in the car dealership showroom. A buyer should do his research beforehand and know the true value and worth of all the additional features a dealership will try to sell him. Always read the contract carefully before signing and don’t be pressured into buying unneeded add-ons.

When choosing an auto loan, a buyer must compare terms and financing from many different financial institutions. They must be aware of their personal needs and budget and be willing to negotiate until they get what suits them best. The dealership is not there to help individual buyers get what they want. It’s there to make a profit even if this includes selling people things they don’t really need. An informed buyer can steer clear of these tricks and get the deal that’s best for them, and their wallet.

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