Car Financing Rates: Get What You Want

When shopping for a new or used car, you'll probably want to try your best to find the best car financing rates available. However, finding the lowest rates is not always easy. In fact, it can be a lot of work. However, if you're willing to take the time, do the research and be patient—you can find the best rates are available to you. In fact, here is a guide on how to do just that:

Step 1 – Know Your Current Credit Situation

First, get copies of all 3 of your credit reports: Equifax, Experian and Trans Union. Once you receive the reports, go over them thoroughly and note any discrepancies or negative items on the report that are not yours. If there are discrepancies or mistakes on them, contact the reporting agency immediately and dispute them. If there are negative items that are yours, do not proceed any further until you address those issues. Perhaps, you may want to consider paying down some higher loan balances or bringing current loans that are currently past due. If you do not, you will not be able to receive the best rates available.

Step 2 -Be Realistic in Your Expectations

Once you have reviewed your credit reports and know your credit score, you will need to be realistic about the level of interest rate that you will qualify for. For instance, if you have a credit score in the mid 600s, you will certainly not be able to qualify for the lowest interest rates available. However, you can help ensure that you get the best rate available—for your particular level of credit worthiness.

Step 3 - Compare Online Lender Rates

Once you know what credit risk category you're in, you may want to consider visiting a site like Lending Tree or E-Loan. These types of sites can help you shop for the lowest rates from a number of different auto lenders. You simply complete the online application and provide the required information. Then these types of websites will submit your loan request, and match it with the lender that is willing to give you the best rates and terms for your particular car loan.

Step 4 - Have Your Check in Hand

Even if you decide not to use prearranged auto financing, it is a good idea to do it to apply and be approved anyway. If you walk into the dealership with a check in hand, this will force the dealership to compete for your auto loan. Sometimes, manufacturers can offer financing incentives that make their auto loans very attractive and tempting. Therefore, always make sure that you listen to what the dealership has to offer—even if you're already have been approved for financing. You can always return the check to the online lender, and say no thank you.

Other things you may want to consider are not using a trade-in, or simply waiting to apply for a loan. For instance, if you are planning on trying to trade in a vehicle, make sure that the vehicle is worth more than you owe on it. If it is not, the balance will probably be rolled in, or added to, your new loan. The more that a bank or lender has to loan on a particular vehicle—the higher their risk will be for them. Therefore, don't give the bank or lender any excuse to increase your interest rate.