About Auto Loans
Car buyers frequently need to use financing in order to purchase a car. The personal loans used to purchase an automobile can come directly from a financial institution like a bank, or car buyers can go through their car dealership for financing. Consumers can obtain auto loans for either new or used cars. Used auto loans apply if the car being purchased is a pre-owned car, while new auto loans are for brand new cars purchased from auto dealers. Used auto loans have higher credit requirements than new auto loans. Car loans are typically fixed-rate and shorter in duration than mortgages and other forms of personal loans. Auto loans with three year or five year terms are the most popular type of loan offered by banks for car financing, although some banks offer loan terms of six or seven years. Purchasing an auto loan online can save consumers save money in processing fees and help them find the best auto loan rates in the market. Rates on auto loans are slightly lower this month than in June. This week's best auto loan rates for qualifying applicants with excellent credit include a 3.81% APR 36-month loan and a 4.21% APR 60-month loan from from Capital One Bank. Compare rates online to find the best auto loan deals.
Tips for Finding an Auto Loan
If you are interested in purchasing a car, your first job is to make sure you fully understand your financial condition. This starts by ordering and reviewing your credit report. The interest rate that you pay on your auto loan, called the annual percentage rate (APR), is a direct reflection of your credit rating. If there is a mistake or if there is erroneous information on your credit report, it can take considerable time to dispute and remove the negative information from your report. It is advisable to check your credit report at least twice a year to prevent any problems. In addition to monitoring your credit standing, auto buyers should track their debt-to-income ratio. Lenders will look at the percentage of monthly fixed installment payments that your household makes as a percentage of your household income. It is important to understand if your debt-to-income ratio is low enough to qualify you for the best auto loan rates that are available.
Another important aspect about finding the right auto loan for your car purchase is to put yourself in a position to negotiate with the car dealership. If you can secure financing before you even step on to the car lot, you stand a much better chance of getting the best possible offer out of the dealership. Shopping around for the best rates and terms is always advisable because the financing available from the dealership is typically very limited in options. Just make sure you are comparing apples-to-apples as you look at APR, balloon payments, penalties, and the other terms and conditions for the loans you find online. Use Moneyrates.com and other respected financial websites to better understand and follow interest rates, personal finance, and auto loans in general.
Finding an Auto Loan Online
Finding an online loan from a bank to purchase a car can be very quick and easy. In most cases, the rates from online sources are also usually lower than the rates found by using the financing offered directly from the car dealership. Another advantage to shopping online is that you can compare and contrast various loans and financing packages without any misinformation, tactics, or pressure from a salesman. Banks are actually good places to shop online for auto loans because as regulated entities banks undergo more oversight and regulation over the marketing of their products than the local financing companies in your state. Even online banks, without the traditional brick-and-mortar branch offices, are subject to the the federal requirements of the Truth in Lending Act and can be a convenient way to finance a car purchase.
When shopping online for an auto loan, it is important for consumers to verify the authenticity of a website before releasing any personal information to the site. Phishing sites and other online scams frequently try to take advantage of rate shoppers. The FDIC website provides an institution directory that can help consumers confirm that a bank website is valid. MoneyRates.com is providing the following list of FDIC-insured banks that are offering auto loans online to consumers:
Pentagon Federal Credit Union (government employees and military families eligible)
Rate can vary by factors which include credit score, loan amount, geographic location, income-to-debt ratio, and outstanding debt amounts. Find the latest news on auto loans and the best auto loan rates at MoneyRates.com.
Last Updated: 7/15/10
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