When you’re buying a new car, you know better than to rush into the decision – you do your research, taking weeks to compare prices and find the best price. But do you do the same for your auto loan?

If you aren’t shopping for the best auto loan with the lowest interest rate, you’re making a huge mistake. You’re putting yourself at risk of paying more money for your new car in the long run. So, here’s what you need know about getting the best auto loan rate possible.

Know Your Credit Score – And Work On It if You Can

One of the most important factors in getting an auto loan is your credit score. Your credit score determines the financing that’s available to you, and it also helps lenders at dealerships and financial institutions determine the interest rate they’ll charge you.

Typically, a higher interest rate is charged to those who have lower credit scores. This is because those with poor credit are the most likely to default on their loans, and lenders want to make sure they’re able to get their money back.

ValuePenguin reports that the following are the average interest rates for 60-month auto loans for these credit score ranges:

  • 850-720: 3.60%
  • 719-690: 4.95%
  • 689-660: 7.02%
  • 659-620: 9.72%
  • 619-590: 14.06%
  • 589-500: 15.24%

In order to get the best interest rate possible on an auto loan, you’ll want to take a close look at your credit score so you can estimate what rate you’ll be given by lenders.

If you can, you’ll also want to work on improving your credit score. A higher credit score can net you a better auto loan rate, so it’s in your best interest to try to improve your score a little before officially signing on the dotted line. See if there are any errors you can get removed, make sure to make on-time payments, and avoid any hard inquiries on your credit report to keep your score steady.

Keep an Eye On Current Interest Rates

If you’re looking for a low interest rate on an auto loan, you’ll also want to keep an eye on what’s happening with interest rates. Interest rates can fluctuate over months and years, so even if you’ve taken a look at your credit score, you might need to double-check the current interest rates.

As the Detroit Free Press explains, interest rates on auto loans are currently hitting high levels that haven’t been seen since 2010. The average rate for a new car loan was 5.2 percent in February 2018, and that was a more than 4 percent increase from 2013. During 2018, the Federal Reserve raises rates four times, which increased interest rates for car buyers everywhere.

So, before you head to the dealership to buy a new car and get a new auto loan, you’ll want to do a little research on current interest rates. Make sure to search online to see what the average interest rate is when you’re ready to buy, and you’ll be able to see lenders offering the different rates available.

Shop Around for Financing

In addition to searching for the current interest rate to avoid any high hikes or sudden increases, you’ll want to shop around at different lenders. It’s very common for car buyers to simply pick out their car at a specific dealership and then accept the financing given to them by the dealer. However, that doesn’t mean you’re getting the best possible auto loan rate.

To get the lowest possible rate, you’ll need to comparison shop – just like you did when you were choosing your car. Before you head to the dealership, look into auto loans from different lenders. Check with your current bank, other local and national banks, and even credit unions. Each institution will likely offer you a different loan and a different rate. Then, you can check with the dealership to see what they’re willing to offer you.

Why does this matter? It could save you hundreds or thousands of dollars in the long run if you’re able to shave just a few points off your auto loan rate. As Bankrate explains, credit unions can offer loan rates that are 1 to 1.5 percent lower than what banks offer. And that could be even lower than what a dealership offers.

Additionally, comparing loans and interest rates before choosing a lender lets you prequalify for financing. When you prequalify, you don’t have to worry about taking any offer handed to you – and you won’t have to take a hard inquiry on your credit score, which can ultimately net you better financial offers. The goal you should focus on is finding the lowest rate possible so you aren’t paying more than a car is worth.

Negotiate Better Interest Rates with Lenders

Once you’ve settled your credit score, researched interest rates, and compared your offers from different lenders, it’s time to negotiate. While it’s easy to assume that a loan is set in stone and can’t be negotiated, you’d be surprised at the perks that could come with this last step

When a lender – whether a bank or dealership – gives you an auto loan, they aren’t going to offer you the best possible interest rate. As Bankrate explains, that’s because they don’t have to. They have no obligation to offer you the best rate that you qualify for, which is why they often markup loans by as much as 1.8 percent.

Don’t fall for this trick. To secure the best rate possible, let your lenders know that you’ve done your homework. Tell them you have other offers and other loans with different – and lower – rates. Some lenders will be willing to match that offer in order to get your business. And in the process, you could knock extra money off of your loan by saving on the interest rate.

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This article was worked on by a variety of people from the Autoversed team, including freelancers, editors, and/or other full-time employees.