How to get a lower rate on an auto loan
- Jerry Edgerton
2013 Ford Fusion Close
(MoneyWatch) Strong auto sales this year have been boosted by the growth of auto loans obtained through dealers, Edmunds.com is reporting. That's good news for the industry and the economy but means that as a car shopper you need to be careful not to overpay in high interest rates for your loan.
"Pent-up demand from consumers unable to get credit during the recession will continue to contribute to auto sales growth as these consumers get access to credit," says Edmunds chief economist Lacey Plache in a just-published report. The expansion of credit has included growth in loans to consumers with subprime credit ratings -- about one quarter of auto loans in the second quarter of this year.
But if you are fortunate enough not to be a subprime buyer, you still have other options beyond dealer financing. And even if you do wind up with a dealer loan, make sure you are not paying above-average rates.
Take these steps to make sure you are getting the best auto loan deal:
- Know your credit score. Go to annualcreditreport.com and look over your report and take the one-time paid option to get your score. This is the key to what interest rate you will pay.
With these precautions, you can upgrade your ride to something like the redesigned 2013 models Ford Fusion or Honda Accord without paying too much for your auto loan.
© 2012 CBS Interactive Inc. All Rights Reserved. Follow @MoneyWatchCarsSource: www.cbsnews.com