How do I get the best APR on a car loan?
Apply to a couple of our best auto lenders or your own bank, credit union or online lender directly — without a middleman — and then ask the dealer to beat your preapproved rate.
Can you negotiate APR on a car?
Yes, you can negotiate APR the same way you negotiate the car’s price by showing the dealer that your own lender gave you a lower rate. You can also ask the dealer what it would take to get a “tier bump.” Dealers sort borrowers into tiers by credit score — the higher the tier, the lower your APR. They may say that you need to put more money down or get a cosigner in order to reach a higher tier.
Is it better to get an auto loan from a bank or dealer?
It’s best to apply to both: a bank, credit union or online lender and the dealer so you have options and can choose the best car loan for you.
What is a good interest rate for a car loan?
The average APR for an auto loan was 9.46% in 2020, but it’s possible to get a lower rate, especially if your credit is strong. Credit unions tend to offer some of the lowest starting rates we’ve seen if you meet their membership requirements, which may be easier than you think. Car manufacturers offer 0% financing, but those deals require high credit scores and only apply to certain models. Used car loans tend to have higher starting rates than new, but manufacturers do offer APR deals on certified pre-owned cars.
How do you get a car loan?
To get a car loan, first use an auto loan calculator to figure out how much car you can afford and then apply to a few lenders online or in person. You could fill out an online form at LendingTree and get up to five car loan offers from lenders at once, depending on your creditworthiness.
How do car loans work?
When you accept a car loan, a lender provides a lump sum of money for the purpose of buying a vehicle that you agree to repay with interest over a set period of time for a set monthly payment. The size of that monthly payment depends on how much you borrow, for how long and at what interest rate. The loan is secured by the car itself — if you fail to repay it, the lender could repossess the car. Read more in our first-time car buyer’s guide.
What should you consider when choosing an auto loan?
When deciding between auto loan offers, consider the APR, the reputation of the lender and how much you’ll pay for the loan in total. A low APR on a long-term auto loan could result in the loan costing more overall. That’s why it’s important to compare monthly payments and total interest costs to see which option is better for you.
Who has the best rates for car loans?
Automakers, credit unions, banks and online lenders could all potentially provide a low rate. You’ll never know what you qualify for until you apply. Applying to multiple lenders within a two-week window will not hurt your credit score any more than applying to one lender. Any drop to your credit score will be slight and temporary.