You may have finally found the perfect automobile. It is the make and model you want, with the right options, and even the right color. Now comes closing the deal on it. If you’re not flush with cash?in other words, you seek a loan?it’s important to know what you’re up against. Here are seven things to do if you want to get the best rate on an auto loan:
1. Take a Step Back
You can’t just go into the dealership and agree to buy the vehicle, at least not if you want a decent price and a fair loan rate. You need to take a step back and see what kind of financing is out there.
2. Know the Terminology
Before you call or visit lenders, brush up on the difference between interest rate and APR. The interest rate refers to the added percentage that it will cost to borrow the money. The APR, however, is the actual annual interest rate factoring in fees and other costs related to the loan. 3. Shop Around
You may think that, because dealers tout their relationships with multiple lenders, that means a dealer will get you the best rate on an auto loan. Often, that is not the case. They’re not obligated to give you the best rate, and they are prone to marking up loans, said Chris Kukla, executive vice president of the Center for Responsible Lending. In general, most states don’t require dealers to disclose the markups they tack onto loans, Kukla said, and the truth is that most dealers make more profit from the financing and insurance side of thei...