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    How To Find The Best Auto Loan Rates

    By Wasatch Peaks on February 11, 2020

    Topics: Auto Loan

    If you’re in the market for a new vehicle, what significant numbers come to mind? The sticker price? Your monthly payment? Your loan term? How about auto loan rates? 

    These are all important numbers to understand when buying a car, but your interest rate can drastically impact other numbers like your monthly payment. 

    So, if you want to find the best auto loan rates for your new vehicle, keep reading to learn 

    about all of the factors you need to keep in mind when it’s time to compare and apply. 

    Review Your Credit Score

    One of the primary factors that will impact your ability to find the best auto loan rates is your credit score.

    When you know your credit score, it will prepare you for what to expect regarding your interest. There are various credit scores that you can review, but you should know your FICO score because most lenders will use that to determine your approval. 

    If you have time to improve your credit before applying, you should do so. Even a small improvement can help you secure a lower interest rate.  

    Here are a few things you can do to improve your credit before applying for an auto loan:

    • Check your credit report to verify that all of the information is accurate. If you find any inaccurate information, get them fixed.
    • Improve your debt to income ratio by paying off debt.
    • Try to keep your credit card utilization rates under 30%.
    • Ask your credit card company to increase your spending limit.

    It might take you 30-90 days to complete this process and have the changes reflect on your credit report. If you have the time to do this, great. Though it isn’t a requirement, it will improve the likelihood of you securing a low auto loan rate

    Understand The Fine Print

    Once you review (and improve) your credit, it’s time to educate yourself further about auto loan rates. It’s essential to do this because you want to be prepared by knowing and understanding relevant loan terms and terminology.   

    Interest rate

    Your interest rate is the percentage of the principal balance your lender charges you to borrow the money. This is not your annual percentage rate or APR, so when you’re comparing interest rates, be sure not to compare interest rates and APRs because that’s not an equal comparison. 

    Annual Percentage Rate

    Your annual percentage rate, also known as APR, is the amount charged each year in interest. This is different than the interest rate and is the rate you should look for when comparing interest rates. 


    Your lender is the company you get your auto loan through. This is often a bank, credit union, or online lender, but some dealerships work with lenders to supply financing, and others provide a buy here pay here financing opportunity. 


    Your principal is the amount you borrow from your lender. It is made up of the cost of your vehicle, interest, and any associated fees. 


    Your term is also known as your maturity date. It is how long your loan is or the length of the loan. This time frame is commonly referred to in months such as a 48-month or 72-month term. Loan terms can range from 12 months to 96 months, but the most common term is 60 months. 

    Consider Shorter Loan Terms

    When you’re looking for the best auto loan rates, consider getting a shorter loan term. They often come with lower interest rates, which allow you to pay less in interest over the life of your loan. When you choose this option, your monthly payment will be higher, but you’ll be paying less overall. 

    Avoid Dealership Financing

    There are two primary ways to get financing through a dealership, and both usually lead to you paying more in interest. 

    The first option is when dealerships work with lenders to provide financing. In this situation, most dealers increase their interest rates to make a profit from each transaction. Other dealerships offer in house financing, which tends to be one of the most expensive ways to finance a vehicle purchase. 

    To avoid these high-interest options, get pre-approved through a bank, credit union, or online lender. 

    Related: What is the Average Monthly Car Payment?

    Get Pre Approved

    Once you’ve reviewed your credit, educated yourself on relevant terminology, and considered some of the tips to get the best auto loan rates, it’s time to get your pre-approval.

    You want to start by researching lenders and their interest rates. Most reputable lenders will have their interest rates available on their website with at least a starting rate or range based on several factors. 

    Consider your bank or credit union since they already have your financial information in their system, and most will offer new and used auto loans. 

    If you’re not already a member of a credit union, they’re a nonprofit and are known for often offering the lowest interest rates across the board. Pair that with excellent customer service, and you won’t regret your decision to become a credit union member. 

    The preapproval process is simple. Just submit your application online, and the lender will let you know your initial interest rate, term, monthly payment, and maximum loan amount. 

    You want to apply with at least three lenders to find the best auto loan rates. As long as you do so within a short time frame, usually around 45 days, your applications will only count as one hard hit on your credit. 

    Once you find your vehicle, you can finalize your loan and take your car home. It’s that easy. 

    Access The Best Auto Loan Rates

    At Wasatch Peaks Credit Union, we strive to offer low-interest rates for our auto loans and excellent customer service to make the loan process easier. Our rates start as low as 2.99%. 

    View Rates

    Wasatch Peaks

    Written by Wasatch Peaks