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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Negotiating a great price on a new car is just half the battle. You need an auto loan with competitive terms to make it a great deal. Loans vary by lender, the borrower’s credit and regional factors. Shopping around with at least three lenders and getting prequalified is a surefire way to improve your chances of getting the most favorable loan terms on an auto loan. When comparing your options, be mindful of the interest rates, terms and fees proposed by each lender. And have your credit score into the good to excellent range — typically 670 or higher — to make yourself a good candidate for inexpensive financing. 6 steps to take before applying for an auto loan
1 Check and improve your credit score
The first step in this process is to get familiar with your own credit history. Your credit score is one of the biggest factors that determine your auto loan rate — the higher your credit score, the lower your rate. Borrowers with excellent credit have average rates around 2.96 percent, while borrowers with poor credit average 12.84 percent, according to data from . There are many online options that allow you to check your credit score, and your bank or credit card may even send you a free update every month. If you’d like a more detailed view of your credit health, you can also access your credit reports from each of the credit bureaus (TransUnion, Experian and Equifax) at . Minimum credit scores vary by lender, but you’ll typically need a score in the mid-600s to qualify, and a score above 700 for the best rates. If your credit score needs work, take some time to before applying for your loan by paying down existing debt, making timely credit card payments and avoiding any other credit applications. Otherwise, you could pay a fortune in interest if a lender does decide to approve you for an auto loan with a low credit score. Loan Auto Key takeaway 2 Do your research
Loan Auto Key takeaway . 3 Shop the total loan amount not the monthly payment
Loan Auto Key takeaway . 4 Limit loan applications to a two-week period
Loan Auto Key takeaway . 5 Compare car loan quotes
Loan Auto Key takeaway . 6 Read the fine print
Loan Auto Key takeaway
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Frequently asked questions about auto loans
Here are the answers to some commonly asked questions that could help you get the best auto loan rate.
What is conditional financing
Conditional financing is a statement from your lender listing the conditions you must meet in order to receive your loan funds. If the financing is “contingent” or “conditional,” the lender can change your agreement later, leaving you with less advantageous terms. Never take a car from a dealer until the financing — down payment amount, interest rate, length of the loan and monthly payments — is finalized.
What is a good auto loan rate
A good auto loan rate is generally any rate below average for your . For drivers with good credit, the lowest rates may be anywhere from 2.5 percent to 5.5 percent, while drivers with poor credit may see rates between 9.5 and 20 percent. It’s essential to shop around so you can choose from rates that are workable for your financial situation. A good loan is one that has low fees and offers repayment terms that make sense for you.
How do you get preapproved for an auto loan
You can typically get for an auto loan online. The lender will conduct a soft credit check and ask for basic financial details, including your Social Security number, employment status, state ID and income. In many cases, you’ll receive a decision from the lender in a matter of minutes.
Should you consider saving up for a down payment
It’s usually best to for a down payment when applying for an auto loan. You could get a lower monthly payment and qualify for a better rate. recommends aiming for 20 percent down, but the average down payment is closer to 11.7 percent. SHARE: Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.