Even with the recent increase in the use of public transportation and ride share companies, statistics show that 91% of US households still own at least one car. It’s simply a necessity for the vast majority of us as we need to get to and from our jobs. That necessity brings on another, finding a reasonable way to finance our vehicles.
Today’s economy is a little better than it was just a few years ago, but we still have a long way to go before we see the end of hard financial times. For most of us, buying a brand new car is completely out of the question, and financing that car is going to mean extending the term of the loan to lower our monthly payments. Yes, that does mean more interest in the long run, but it isn’t out of the scope of possibility to lock in decent used auto loan rates for 72 months terms.
Utilize Your Credit Score
In the past, viewing your credit score meant paying a fee and lowering your score all in one fell swoop. Nowadays, thankfully, we have access to online tools like Credit Karma that allow us to view our scores for free. That information provides you with the ultimate bargaining chip when speaking with a lender in your quest for the lowest rates possible.
If your score isn’t exactly perfect, paying off any existing loans or outstanding bills can give it the boost it needs to open up new opportunities for lower interest rates.
Narrow Your Price Range
Did you know that average markup at the dealership is 2.5%? If you’re looking to save money, opt for a separate lender such as a bank, credit union, or a company that specializes in auto loans. This will allow you to be pre-approved so you know exactly how much you can afford, effectively narrowing your price range.
These lenders offer lower interest rates than you will ever find at the dealership, and often have far less limitations on borrowing money for a used car. In some cases, you can find an auto loan for a car up to 10 years old with under 125,000 miles! Always make sure to see how they score with the Better Business Bureau, and view their track record via state or federal .gov sites.
Try to Pick a Newer Car
The older the car is, the higher the interest rate is usually going to be. Choosing a newer car helps to avoid this, and you can still find amazing deals on used vehicles that are only a few years old. If you are able to make a down payment, this will also help keep the monthly cost even lower. If not, remember to use your credit score as a bargaining chip.
Using an auto loan calculator can help you determine what you will be able to afford.
Rates You Can Expect
Rates are always subject to change, so keep your eyes open for one of the lenders you have found to drop theirs. You can expect anywhere between 2 and 7 percent based on various lenders, but here are few to consider for 72 month terms.
- Capital One – 3.39%
- Nationwide – 2.69% to 5.14%
- USAA – 2.49%
- LightStream – 3.34% to 6.19%
- Chase – 3.60%
- Mutual of Omaha – 6.99%
Those are just the tip of the iceberg, but It certainly pays to shop around before making a decision. Mutual of Omaha has an incredibly high price compared to some its competitors, while most of them are well below the national average of 4.43% for a 72 month loan.
Finding reasonable rates for a used car requires some research, but it’s a whole lot better than settling for the astronomical APR at the dealership.
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