Bankrate Loans Editor Katie Lowry I recently bought a car. Despite working in finance for 11 years, the experience was new to her. For one thing, this was her first time funding a brand new car. It was also the first time I’d fund a vehicle for over $10,000.
Lowery is a dedicated fan Credit Union Funding Over the years, she has had a great experience in financing for the manufacturer and reports that she will look at it again in the future.
“I’ve been a credit union the whole time,” she says, explaining that two of her previous cars were funded through her local credit union. She was another person who personally paid cash.
This time, Lowery has chosen to raise funds from the manufacturer. And she shared the following tips to get the most out of it:
Study what you want and what it costs
Laurie knew what she needed in the car. She had to have feet and storage for the two children and the athletic equipment to carry around the ferry. She also needed space to work from her car if necessary.
She also knew what she wanted. This is her first time buying a new car, and it will be the main car of the family, she decides to splurge on all the bells and whis.
“I knew the situation with the car loan, I could afford it, I couldn’t afford it, I could make monthly payments,” explains Lowery. She planned to buy for several months, and when she decided on a vehicle, she used the app to compare and track prices until she was ready to buy.
The sale went much faster than she expected. She arrived at the lot for a test drive, but a few hours later the deal took place. She believes it in the time she spent researching it.
Take your time to check your budget and calculate it How many cars can you buy?. You will need to check the total cost of the vehicle and monthly payments. Bank Rate Automatic Loan Calculator You can enter different fees and terms and see how changing the terms of your loan will affect its costs.
Prioritize down payments
Most experts advise consumers to put it Vehicle down 20% purchase. For manufacturer finance, that may be a must. Even if not, down payments reduce the amount of money consumers have to fund, and often result in lower loan rates and lower monthly payments.
“Lenders have been demanding record amounts of down payments in recent years, and they’ve gone down a bit about it.
– Jonathan Smoke, Chief Economist at Cox Automotive
That was for Lowery, who chose to beat $30,000 worth of cash and trade value towards the $60,000 Honda pilot she wanted. The dealer responded with two offers: 1.99% in 36 months and 2.99% in 60 months. Experts often recommend it Select a shorter term To reduce interest costs, Lowery went with slightly higher interest rates in the long run, as it deserves a slightly higher interest rate with a slightly more flexible monthly payment.
| April | Loan period | Monthly payment | Total interest paid |
| 1.99% | 36 months | $859 | $929 |
| 2.99% | 60 months | $539 | $2,336 |
“But before I sign anything, I’d be on the loan. Prepaid penalty. ” Lowery said, “I took the long term with a plan to pay off the loan as early as possible (AS).”
Paying off the loan early will help her avoid the extra profits of the long loan term, but there will be space within her budget if she needs to switch to the minimum payment. Her monthly payment of $539 is still low Average car loan payments According to Experian, for the new car, which was $724 in the fourth quarter of 2024. In fact, it’s just above the average monthly payment for a used car that sat for $525 over the same period.
Know who you work with
Before choosing a car or testing it out, it is important to investigate the vehicle you want, current rates and potential lenders. You should also look into dealers in your area. Dealers tend to enter into their own contracts with automakers that could affect the price of new models. They also set their own markup and incentives on the lot of vehicles. In other words, the difference in costs from one dealer to another is substantial.
It’s worth it even if the dealer offers the vehicle you want Ask about dealer fees Before you get into the negotiations. Reading online reviews will help you understand the overall good and bad situation.
As for Laurie, she knew that the dealer she was experiencing had a good reputation. She asked for specific information (a list of monthly payments and fees), and sales staff provided exactly what she wanted. Their transparency sealed the deal.
“For me, I feel like I know that a lot of information is confident and the key to making the right phone call. I wasn’t afraid to leave,” says Laurie.
It may seem counterintuitive, but being willing to leave an offer at the table is a good tactic Negotiating car pricesespecially if the sales staff feel that they are not transparent towards you. After all, the details of high pressure sales tactics and false loans are often distinctive Automatic lending fraud.
Buy rates and compare multiple lenders
“For most consumers, comparing pre-borrowing lending options is important,” advises Lowery. “The first lender you apply for doesn’t necessarily offer the best rate. The only way to find the best deal is to shop.”
Comparative shopping is important when it comes to big financial commitments. Various eligibility criteria must be met, including minimum income and debt income (DTI) ratios. However, your credit score is one of the most important factors.
Eligibility for a manufacturer’s funding transaction can be challenging, and lenders often require a credit score of 675 or higher and a DTI of less than 50%. Some manufacturers may need to limit down payments, strict conditions or incentives on certain vehicle models.
“People with a credit score of 760 or higher will get a much lower interest rate on car loans than subprime people,” says Jonathan Smoke, chief economist at Cox Automotive. “And before you think about getting a car loan, it’s worth improving your credit.”
The new car car loan rate, sitting at 4.77% at 13.08% (scores from 501-600) and 4.77% (scores above 780) for subprime borrowers, can save a significant amount of interest by improving their credit. It also offers more lender options and facilitates eligibility for special financing terms offered through manufacturer funding, including 0% financing.
Lowery chose not to follow this path, but for reasons that go with it. “I’m very familiar with the car market so when I saw it I knew quite a lot of trades. Ultimately, I don’t regret buying or financing options a little.”
Conclusion
If you choose to raise funds from the manufacturer, Best car loan fees In the market, to qualify, you need a good credit score, a low DTI ratio and a proper down payment. You can also research dealers who know what you want and what it costs by making the most of your negotiations, prioritize down payments, and provide manufacturer funding transactions with excellent customer service.
