LendingTree’s loan marketplace can help you find the best car finance deals, with no impact to your credit score.
Manufacturer financing is when the automaker itself provides your auto loan. This is also called captive financing. Examples are Toyota Financial Services or Ford Motor Credit.
Automakers have an incentive to offer new car finance deals. The more attractive the loan, the more keen you might be to buy a car. You’ll need excellent credit to qualify for the best deals. But in general, many manufacturers are open to working with borrowers with at least fair credit.
You could get an auto loan from your bank or credit union. Rates on credit union auto loans can be especially low. Per federal law, APRs on credit union loans can’t exceed 18.00%.
Bank and credit union auto loans can be harder to qualify for than online loans. Plus, you have to be a member to borrow from a credit union.
Whether you have bad credit, excellent credit or somewhere in between, there’s likely an online auto loan out there for you. This option takes more of a hands-on approach (you won’t have a finance manager guide you). However, most online loan applications are straightforward and take a few minutes to complete.
Buy here, pay here car lots target people with bad credit and don’t qualify for traditional auto financing. With this, the dealership itself will find your loan (rather than a financial institution).
These loans can carry triple-digit interest rates. Not only that, but buy here, pay here lots usually carry older model cars. Those two factors might lead you to owe more than what your vehicle is worth. In other words, you could find yourself with an upside-down car loan.
You’ll often find the lowest interest rates through manufacturer financing. You might even find a 0% APR deal if you’re shopping during a promotional sales event. You’ll need to ask your local dealer for details — deals and incentives usually vary by zip code.
Still, don’t assume that you’ll get the best deal though the manufacturer. Get a handful of loan offers from different types of lenders before signing.
Your credit score isn’t the only thing that determines your auto loan rates. Lenders also tend to give lower APRs on midsize loans that have shorter loan terms.
Your loan term is the amount of time you have to pay off your car loan. Terms typically range from 12 to 72 months, but 84- and 96-month terms are increasingly common.
Although a longer term can give you a lower monthly payment, we recommend that you choose the shortest term you can comfortably manage. The longer your loan term, the more overall interest you’ll probably pay.
Use an auto loan calculator to see how a shorter loan term could help you save thousands of dollars over the life of your loan.
No one goes into a loan with plans of late payments. Even so, ask about grace periods before signing on. For instance, you could skip up to two months’ of payments a year with Southeast Financial Credit Union’s Skip-A-Payment program.
If you plan on paying online, check the lender’s mobile app star rating on Google Play or the App Store. Bigger banks and credit unions tend to have more (or higher-rated) digital options than small lenders.
The Consumer Financial Protection Bureau (CFPB) maintains a database of consumer complaints. Use it (along with LendingTree lender reviews) to get an idea of a lender’s customer service experience.
Does “well-qualified buyer” ring any bells? To fall into this category (and access the lowest rates), you’ll generally need excellent credit (720+).
Overall, though, the credit score requirements depend on the lender. Some, like CarMax and Carvana, don’t have a minimum credit score requirement. Others, such as LightStream, only work with borrowers with good to excellent credit.
Check your score for free with LendingTree Spring. We’ll also give you free score updates and personalized tips that could help you save on your next loan.
When you shop for a big-ticket item, you don’t jump on the first deal you see, right? The same should go for an auto loan. This is where preapproved car loans can help. Getting preapproved can also help you negotiate car prices and stick to your budget.
Preapproval requires a hard credit hit. If you get your rate shopping done within 14 days, only one will count against you. You could also use LendingTree’s auto loan marketplace. We’ll help you shop with some of the nation’s most popular lenders, for free and with no impact to your credit.
Aim to get three to five financing offers and compare the metrics we discussed above, paying special attention to loan terms. Remember — some loans might look cheaper because they have a lower monthly payment. In reality, it may just have a longer term.