How to get the best rate on a used car loan?

May 24, 2014 6:51 PM

Looking for more options than just dealership financing

I've decided I want to get an 07-08 Acura TL for my first car purchase and would like to keep the total cost including taxes and fees under $18,000. I know I could get newer cars with really low miles for less than that, but I've always wanted a 3rd gen TL so I'm pretty dead set on this. So now I just have to shop around for a loan at a good rate.

Here's my situation:
I've been building up a good credit history over the past year with a secured Capital One card and their credit tracker says I'm at 734. I have no debt and as much as $4,000 to make a down payment with. I've lived at my current residence for more than 5 years, but plan to move nearby shortly after getting the car. I've been employed for the last 7 years straight, but have only been at my current full-time job for the past 4 months.

So where should I be shopping for a loan, and how low of a rate can I expect to get? How much leeway can I expect on the age, mileage, and place I purchase the car? I know a lot of the big companies giving out used car loans set restrictions on these things, such as requiring the car to have less than 70,000 miles or requiring that it only be purchased from certain types of dealerships. I'd prefer to be able to purchase a car up to 100,000 miles and from whichever dealer or person I find the best deal from. I've been getting a lot of offers for a Discover card, so would it help or hurt my chances at all of getting approved for an auto loan if I applied for the card as well?

Any help appreciated!

posted by Ryogen to Travel & Transportation around Pennsylvania (8 answers total)

FYI (since I recently bought a used car and went through this) Bank of America's loans are: franchise dealer only (although they have a separate loan rate for private party), less than 125K miles, newer than 2004. I applied at BofA because they had the best advertised rates for good credit for the loan I was looking for, but I ended up going with the dealer's financing because they found a lower rate for the same terms. That's what I've done the last two times and it was helpful because it put the pressure on the dealer to offer me something better.

There are sites like Bankrate and Lending Tree that compare rates, supposedly, but I found that they just had the same few banks anyway, so I just checked local credit unions and banks myself.

I don't think you want to apply for a card right now, the opening of a new debt line would probably offset the fact that you have a line in good standing. But I'm not an expert on the credit rating system.
posted by selfnoise at 7:04 PM on May 24, 2014

I recently got 2.49% at my credit union and that was about 1% lower than Chase.
posted by Dansaman at 7:21 PM on May 24, 2014

Don't apply for Discover card.

Check with your local credit union. Also check with Ally bank or one of the other good online banks with low overhead.
posted by J. Wilson at 7:35 PM on May 24, 2014

I found LendingTree to be quite useful when applying to re-finance my car. Lenders will contact you, which is convenient in one sense but annoying in another sense. But I got a very good rate from a bank I didn't even know did auto loans.
posted by drjimmy11 at 7:38 PM on May 24, 2014

I went to my local credit union and let them and the dealership get into a bidding war over the interest rate. With your credit score you will not have any problem negotiating for a great rate.
posted by cairnoflore at 8:21 PM on May 24, 2014 [1 favorite]

Credit union, credit union, credit union! If you don't have one, find one, they're everywhere and everyone should have one. They are the very best for this.
posted by Anitanola at 9:48 PM on May 24, 2014 [1 favorite]

I work in subprime financing of vehicles and cannot emphasize the usefulness of credit unions if you have credit of 600 and up. They will be able to give you far better rates than in-house financing and big banks will. You should still compare rates between the CUs you find, however.
posted by cobain_angel at 2:43 PM on May 25, 2014

Nthing credit unions. One problem is that they sometimes have restrictions on how old the car can be, though.
posted by paultopia at 4:35 PM on May 25, 2014