Best Car Loan Rates - Prime Lenders vs. Sub Prime Auto Lenders

Posted by Nick Niesen on October 29th, 2010

The best car loan rates are out there if you search for them. Based on your credit past, you may find either a prime or sub prime auto lender is your best choice. The surest way to find the answer is to request free online loan quotes to narrow your choices.

The Differences Between Prime and Sub Prime Lenders

Prime and sub prime lenders differ in the types of loans they offer. Prime lenders offer A loans to those with credit scores of 650 or higher. Sub prime lenders provide loans to everyone else. Sometimes though, financing companies offer both types of financing.

Sub prime loans have higher rates and fees since the risk is higher for lenders. Reasonable lenders will only charge a couple of points higher for most types of loans.

Who Has The Best Rates?

The only way to find who has the best rates is to do your own comparison shopping. Depending on your credit score, you may be surprised who can offer you the most competitive package.

As important as low rates are, fees should also be considered. Fortunately the government made comparison shopping easy by requiring lenders to disclose the APR of any loan. The APR includes both closing costs and rates.

Find The Right Lender

You should start your car loan shopping online, not at the dealership. There are too many incentives for the salespeople for you to be sure you are getting the best deal.

Start with a car loan broker site that brings many lenders together. You can quickly access free quotes from there. Then follow up with other lenders.

And don?t give permission for a lender to access your credit report unless you are pretty sure you want to go with their offer. Otherwise, you will find that multiple credit inquires will lower your score and hurt your loan application.

While there are no instant solutions to finding the best auto loan rates, online sites do make it faster. A couple of hours spent securing your vehicle financing will both save you money and make the car buying process easier.