Auto Lending Options

If you’re looking to buy a new car, you have plenty of options to choose from for financing. Provided, of course, that you have decent credit. A great credit score would be defined as any any score above 700. These buyers will basically have their pick of lending options and lenders would likely compete for these buyers with incentives like zero percent financing. If you have a fair credit score, below 700 until the mid 600s, you can still count on lots of lending options. Only if you have a very poor credit history, with scores in the low 600s or below will you be faced with tough decisions in terms of car financing.

Typically local banks are the first place people go for car loans. You might already have an established relationship with an institution and lending decisions are made locally by people you might know personally. Local banks offer advantages like close personal relationships, but don’t always have the best interest rates on auto loans. Credit unions are financial institutions formed to service a certain segment of a population like employees of a large company, or residents in a particular community. Credit unions often have some of the best interest rates available on vehicle purchases and should be considered if you have access to one. Typically credit unions require you to be a member before it will extend a loan to you. Membership requirements are generally satisfied with a modest deposit into a credit union savings account.

Large national banks and credit cards companies are also active in the auto loan business. Check with your credit card company to see if they have any attractive offers for existing customers purchasing cars. Many dealerships also deal with large national banks for their in-house lending programs.

If you have paltry credit, you might be faced with choosing a high interest loan from a subprime lender willing to take a chance on you. Another option might be a rent-to-own dealership that offers in-house financing and that requires payments at an accelerated rate compared to traditional loans. These scenarios also most often carry hefty interest rates since the risk is greater. There are plenty of options for car loans available and a great place to find more resources on the topic is Cars.com.

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