Getting a new car is exciting, but in the heat of the moment, when the pressure is on, we might draw a blank and miss our opportunity to negotiate a lower interest rate on our auto loan when discussing the numbers.
When there’s competition, everyone is willing to go the extra mile to make a sale and earn your business. This opens the door to negotiations and the option to walk away and talk to someone else to see what they are willing to do. However, you can’t effectively do this if you don’t know what things cost.
Before walking into a dealership, you need to go and get pre-qualified at a credit union. They’ll let you know what your interest rate would be and about what your monthly payment would be on a new loan. You’re just getting pre-qualified at this point, you don’t have to follow through with anything.
What is a good interest rate when buying a car?
There is a lot that is going to go into this, but it’ll depend on what your credit score allows, and of course what the current offering is for interest rates. At the time of this writing, most appear to offering 4.5% – 5%.
With that said through… 0% if obviously the best rate but you’ll only find those offers typically with brand new cars and you have to finance through the Manufacturer.
Which bank has the best auto loan rates?
Typically your local credit unions will offer the best interest rates. Very rarely have I seen a big bank offer a more competitive interest rate.
Let the dealer present financing options
Because you’ve done your due-diligence in researching what sort of interest rate and payment you qualify for, you could be missing out big if you don’t let the dealership tell you what rate they can provide you. Dealerships often have relationships with banks and can get a slightly sweeter deal than you were pre-qualified for.
If they are higher, tell them what you’ve been prequalified for and see if they’ll match it. If they won’t, go back to your credit union to secure financing and come back to them when you have money in hand. Likely, they’ll match your rate because they don’t want you to leave and risk losing the sale of a car.