Benjamin Franklin once said that a person can know the real importance of money when he tries to borrow some. If you ask a car buyer, he will tell you the same thing. It is because he has to find the best loan program among several options. He has to take care of searching the lowest loan rates in order to make the loan program affordable. If you are in the auto financing market and searching for lowest rates on auto loans, here’s some help:
Who offers the lowest rates on auto loans?
WalletHub, a website that provides financial advice to its members, analyzed more than one fifty lenders and auto financing institutions to find the one that offers the least expensive auto loans. It reported that auto manufacturers offer the lowest rates on auto loans. Credit union is the second best option for car buyers seeking affordable loan program. The report mentioned that a traditional bank is the costliest alternative for an average car buyer because of its high-interest rates.
“Auto manufacturers are rebounding from a terrible economy when people weren’t buying new cars, so even though things are improving, they’re still sweetening the deal with low rates,” informed Jill Gonzalez of WalletHub.
The website found that manufacturers offered 1.92% APR for a three-year auto loan term to car buyers with good credit history. Such low rates were offered to car buyers for buying the manufacturer’s best-selling models. The credit union and banks offered 2.44% and 4.31% respectively on similar loans.
General Loan Approval Criteria of Auto Manufacturers
Although every auto manufacturer has different requirements, here are the general loan approval criteria:
>> Good credit score
>> Debt-to-income ratio lower than 40%
>> Gross Monthly Income higher than $ 2000
>> Co-Signer for young car buyers and people with no credit score
Following is the list of car buyers who are rejected by most auto manufacturers:
>> People with bad credit history
>> People with recent bankruptcy discharge
>> First-time car buyers without co-signer
>> Car buyers with repossession in last one year
If you fulfill the auto manufacturer’s loan approval criteria, it is best to obtain your auto loan from him. It will help you in saving money. Sadly, many car buyers have bad credit history or bankruptcy. Such buyers are not able to access lowest auto loan rates offered by auto manufacturers.
If your loan application has been rejected by an auto manufacturer, you can seek help of online auto financing companies. Such companies offer loans to people with less-than-perfect credit scores. They mainly focus on sub-prime car buyers. Also, their approval ratio is high because of a large lender-dealer network.
So, don’t worry if you cannot find an auto manufacturer to finance you. You can always opt for an online auto financing company to obtain loan approval.
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