CHARLOTTE — Buying a new or used car is expensive enough, but where you get your financing can make a big difference in what you ultimately pay.
Consumer Reports says comparing loan offers before you head to the dealership can help you find a better deal.
Julian Fuentes and his dad, Felix, love cars and car shopping. But when it was time to get a loan, they were looking at much higher financing costs than before.
“Our first electric vehicle that we bought, we have it at 1%,” Felix said. “The car we just bought is now at 7.9%. And I hold an 850-credit score.”
Their experience shows how much auto-loan rates can vary even with strong credit. Regardless of your credit, you should shop around and compare interest rates; even a little difference in that rate can save you a lot of money in the long run.
Consumer Reports’ Keith Barry recommends getting preapproved before heading to the dealership. You may find some of the best offers through credit unions. Since they’re not-for-profit, they often offer lower interest rates.
Another option is online lenders, which can make it easy to compare multiple offers quickly and may give car shoppers more choices. And don’t overlook your bank. It can be a good place to start, especially for existing customers. But banks may have stricter lending standards, higher fees, and less flexibility for consumers with weaker credit.
Once you get to the dealership, compare its financing offer with the ones you’ve already lined up. Dealers can sometimes mark up the rate on a loan and keep the difference. But they can also offer promotional rates that are lower than what you could get from a bank.
Consumer Reports recommends keeping all your loan applications within a 30-day window to help limit the impact on your credit score. As a precaution, Consumer Reports also recommends checking a lender’s Better Business Bureau rating before submitting an online application.