How to get a better auto loan rate

STEP 1

1. Know your credit first

• Check your credit reportsFix errors before you apply
• Your credit shapes your rateLenders use it to price the loan
• Know your budgetThe payment and the total cost

STEP 2

2. Get preapproved before the dealer

• Apply with a few lenders firstBefore you walk onto the lot
• Walk in with a rate in handNow the dealer has a number to beat
• It keeps you in controlOf the payment and the price

Source: Consumer Financial Protection Bureau (CFPB).

STEP 3

3. Shop more than one lender

• Compare banks, credit unions and online lendersRates can differ
• Compare APR to APRNot APR to an interest rate
• Credit unions are worth a lookMembership rules vary, so check if you qualify

Source: CFPB.

THE WINDOW

4. Shop fast to protect your score

• Auto loan checks within 14 to 45 daysUsually count as one inquiry
• The window depends on the scoring modelSo keep it tight
• Aim to finish in a few weeksNot a few months

Source: CFPB.

THE TERM

5. Watch the loan length

• A longer loan lowers the paymentBut you pay more interest overall
• A shorter loan costs less in totalEven if the payment is higher
• Compare the total costNot just the monthly number

Source: CFPB.

AT THE DEALER

6. Questions to ask

• Can you beat my preapproved rate?
• What's the APR and the total cost of the loan?
• Which add-ons are optional?
• Can I see the numbers in writing before I sign?

Educational only, not financial advice.