Auto Loan 101: Tips for Getting the Best Auto Loan Rate
March 2025
Shopping for a new or new-to-you vehicle is an exciting experience, but choosing the right financing is crucial to ensure your purchase fits within your budget. Securing a favorable auto loan rate can significantly affect your monthly payments and the total cost of the loan. At UCU, we’re here to help you understand the factors that impact rates and how to secure the most competitive option available.
Understanding What Impacts Auto Loan Rates
Auto loan rates are influenced by several factors, including your credit score, the loan term, and the age of the vehicle you’re purchasing. Understanding these elements can help you make informed decisions when evaluating your financing options. While specific rates vary, being prepared can help you qualify for a favorable rate.
Tips for Securing the Best Auto Loan Rate
- Check Your Credit Score: Review your credit score and credit report before applying for an auto loan. Typically, higher scores translate to lower rates but if your score needs improvement, address outstanding debts and make timely payments before applying for financing.
- As a UCU member, you have access to SavvyMoney, a powerful financial checkup tool. Try SavvyMoney within the UCU Mobile App or Digital Banking by logging in and clicking on”Credit Score/Loan Rates” in the menu. This gives you daily access to your credit score, full credit report, credit monitoring, financial tips, education topics, and more.
Click to learn more about SavvyMoney.
- As a UCU member, you have access to SavvyMoney, a powerful financial checkup tool. Try SavvyMoney within the UCU Mobile App or Digital Banking by logging in and clicking on”Credit Score/Loan Rates” in the menu. This gives you daily access to your credit score, full credit report, credit monitoring, financial tips, education topics, and more.
- Save for a Down Payment: A larger down payment reduces the loan amount you need or principal, which can help you secure a better rate. It also demonstrates to lenders that you’re financially prepared for the purchase.
- Apply for Pre-Approval: Getting pre-approved for a loan allows you to shop for vehicles with a clear understanding of your budget and financing options. It also gives you leverage when negotiating with dealerships.
- Choose the Right Loan Term: Longer loan terms may have lower monthly payments, but they can increase the overall interest paid making the loan more expensive in the long run. Striking a balance between an affordable monthly payment and a shorter loan term is key to minimizing the overall costs of the loan.
- Understand the Total Cost: Look beyond the monthly payment and focus on the total cost of the loan. Consider interest, fees, and any additional costs that may be included in the agreement. It’s best to look at the whole picture of the loan and not just the monthly payment.
Take the Next Step with Confidence
Securing the best auto loan rate doesn’t have to be overwhelming. By taking proactive steps and being informed, you can drive away knowing you’ve made a wise financial decision.
Remember, these are just some general tips to help you understand what goes into typical auto loan terms. Everyone’s situation is different though and at UCU, we’re here to support you on your car-buying journey with resources and guidance tailored to your needs. At UCU, we believe everyone deserves a chance to drive their dream car. Whether you have perfect credit or have faced financial challenges, we’re here to help you!
View our Car Buying Toolkit for helpful tools and tips to make car buying a bit easier.
