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Auto Loans: Finding the Best Car Loan Interest Rate


Auto Loans: Finding the Best Car Loan Interest Rate

Dale Benton
June 21, 2013


Auto loans are available both online and offline. The question is how to find the best car loan interest rates, not just to find any old car loans. The answer to this lies not only in finding the right lending company, bank or car dealership website, but also in yourself. Here is what is meant by that, and how you can take steps to get the best possible car finance.

Securing a good car loan interest rate can make big difference t your monthly repayments. Not all auto loans are the same, and it would benefit you to understand the factors that banks and other lenders use when setting their interest rates to people buying a car.

Auto Loans: Factors Affecting the Car Loan Interest Rate

The Car Itself: You will usually get a lower interest rate on a new car than if you were buying a used car. There are also degrees of 'used.' A 2-year old car will likely get a better interest rate than a clunker - if you get a loan at all!

The Term of Your Loan: 'Term' means 'length of time' in lender-speak, and if your loan is over a short period you might be lucky and get 0% finance. If not exactly zero, shorter loan periods come with lower interest rates because there is less of a chance of you defaulting. You also have the lenders money for a shorter period of time.

Your FICO Score: Your FICO score, or credit rating, is a very important factor when seeking auto loans. The best car loan interest rate is offered to the borrower with the highest FICO score. There are things you can do to improve your FICO score, although they are not for discussion here. Fundamentally, you should start improving your credit rating a few months prior to applying for an auto loan.

The Lender: While your car dealer might offer you car finance, they do not actually finance the auto loans themselves. This is passed on to specialist finance companies or banks. Sometimes you might get a better deal from your bank. Your own bank may offer you a lower interest rate than a car finance lender because you are a regular customer. This is particularly the case if you have a healthy balance in your account! Credit unions are another option available to you. The interest rates charged are often much less than bank rates.

Car Dealers: Many claim that you are best not to have your car dealer arrange your auto loan. Sometimes this can be good advice, but reputable dealerships can often find better loans than you could yourself. They often have contacts with trustworthy brokers and lenders and can frequent find good auto loans with excellent interest rates and repayment terms. Some car dealers can borrow cash at special prices. Those that offer this saving to selected clients can save you a great deal on repayment levels

The Equity: If your car is worth significantly more than the auto loan you take, then your interest rate might be reduced. This can be the case if you make a good down payment or get a good bargain on the vehicle. When auto loans are secured on the car itself, and there is a good equity (the vehicle is worth significantly more than the loan,) you can often negotiate good terms. These are mainly in the form of longer repayment periods or reduced interest rates.

Best Auto Loan Interest Rate Summary

To get the best possible car loan interest rate, you should consider all six factors above. Likely the best action you can take is to start improving your FICO score. Pay off your highest interest debts, but do not cancel credit cards - that counts against you. Nor should you seek new credit other than your car loan.

If you can make a reasonable down payment this will count in your favor by increasing the equity on your car. Auto loans are easy to get, but it is not so easy to get good interest rates unless you know how. Follow the above advice and you should be successful in getting a good rate, if not the best car loan interest rate available to you.


It is important to get the best car loan interest rate if you are to minimize your monthly repayments. Low interest auto loans are not always easy to find. Check out the Benton Nissan website for a good rate of interest on your auto loan - and not just on Nissans, but on Dodges and other makes too.




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