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Where To Find The Lowest Auto Loan Rates
By EchoBay Loans Staff Writer

There are a number of places you can turn to in order to obtain financing for your auto loan. Online lenders, banks, credit unions, dealerships… The choices are endless. While finding someone to lend you the money you need to fund your vehicle purchase may not be a problem, finding out where to go for the best auto loan rates can be a little more complicated. Not all lenders offer the same interest rates, and not knowing where to go for the best rates available can cost you quite a pretty penny.

The local bank has always been a popular source of borrowed funds, but only for those with clean credit.
Banks usually have stricter lending requirements and will oftentimes require you to have a down payment before they will approve your loan. Sometimes their auto loan rates are competitive, but consumers can usually do better by going with an alternative financing source for their auto loan needs.

Credit unions are another popular lending source for consumer auto finance needs. Since they're a nonprofit business supported by members, they are generally able to offer competitive auto loan rates. Whether or not consumers will need a down payment when arranging their auto financing through this type of source will be determined by the specific requirements each individual credit union has. To borrow money from a credit union, you have to be a member and each individual credit union has different membership requirements. If you don't meet these membership requirements, you won't be able to borrow funds from that particular credit union.

Sometimes it's convenient to arrange your financing at the same time that you purchase your vehicle, which is part of the reason that dealers offer to arrange financing for their car buyers. The other reason that dealers arrange financing for car buyers is because this is a profitable product for the dealership. In fact, the higher the interest rate they can get you to agree to, the more money they stand to make. Because of this, the auto loan rates at dealers are not necessarily the best available.

The only time a dealer would be your best bet is when they're offering no-interest or low-interest auto financing through the manufacturer; otherwise their auto loan rates tend to be a bit on the high side. If you don't mind sacrificing dollars for convenience, then this option might work well for you; but if you want to get the best deal on your auto loan rate, be sure to investigate other lending sources mentioned in this article.

Many people are also looking to the equity in their homes as a means of financing their auto loans. This finance method can have its upsides and its downsides. If interest rates are low, a home equity loan may be a great way to get low-interest financing for your car purchase needs. However, it's important to realize that you're going to be putting your home on the line when you finance your vehicle this way.

If you can't make the payments on the home equity loan, you might wind up homeless. On the other hand, if you can't get to and from work because you can't obtain financing for your car, you may also have the same situation. If this is your best financing option, make sure that you pay off the loan as quickly as possible. If you only keep the vehicle for five years, you don't want to be paying on it for ten.

If there's one lender to avoid when you're trying to get the best auto loan rates possible, it's the "buy here/pay here" car lots. Unless you absolutely cannot get a car loan anywhere else, this type of financing should be avoided like the plague. Find out what the maximum interest rate is that these dealers are allowed to charge by law, and chances are that's what their rates will be set at. When it comes to locking in the best auto loan rates, this type of financing isn't even a contender.

The Internet has definitely changed the face of auto loan lending. In addition to being extremely quick and convenient, online loans tend to provide consumers with the best auto loan rates available due to the amount of lenders competing and their lower operating expenses. Not only are online auto loans convenient and an excellent source for the best available auto loan rates, most often this type of financing does not require a down payment.

Overall, if you're looking for the best auto loan rates, the competitive marketplace in the online lending arena will probably be where you find the best deal.


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