Auto Loan Rates and Car Financing: Looking to buy a new car in 2024? You’re probably already curious about what kind of auto loan rates and financing deals you could qualify for. The good news is that interest rates are still looking competitive this year, and lenders are eager to finance your ride. In this article, we’ll walk through some of the best auto loan rates available right now from top lenders like Capital One, Lightstream, and local credit unions. We’ll also break down key financing terms like APR and provide tips to help boost your chances of scoring an affordable monthly payment. Whether you’re buying new or used, or have great credit or not-so-great credit, you’ll learn insider strategies to lock in the lowest rate and easiest qualifying loan or lease offer on your next car.
Current Auto Loan Interest Rates in 2024
With the current economic climate, auto loan interest rates in 2024 are at historic lows, making it an excellent time to finance a new or used car purchase. Here’s an overview of what to expect:
- The average new car loan interest rate is around 4.5%, while used car loans are averaging 5.2%. These are a full percentage point lower than just a few years ago.
- Interest rates can vary widely depending on your credit score and history. Those with excellent credit (scores above 720) can qualify for rates as low as 2.5%. Subprime borrowers will pay higher rates from 6-12%.
- Shorter loan terms of 3 years will have lower rates than 5- or 6-year loans. But you’ll have higher monthly payments.
- Certain car makes and models may have special financing offers from either the automaker’s financing arm or participating lenders with rates as low as 0%.
- Options like making a larger down payment or taking a shorter loan term can help guarantee the lowest rate.
With the Federal Reserve likely to cut rates further in 2024, economists forecast auto loan interest rates dropping even lower by year’s end. This makes early 2024 an optimal time to get pre-approved and start shopping around for the most competitive auto financing terms. Monitor Fed announcements closely for any rate changes.
How to Get the Best Auto Loan Rates
When shopping for a car loan, securing a low interest rate can help save you thousands over the life of the loan. Here are a few tips to help you get the best rates:
- Check your credit score and report. Lenders base rates largely on credit, so know your score and correct any errors on your report. Scores above 720 qualify for the best rates.
- Get pre-approved before visiting dealers. Pre-approval locks in a rate and shows you have serious buying power. Dealers may then offer special rates to win your business.
- Compare quotes from multiple lenders. Banks, credit unions, and online lenders all offer financing. Shop and compare quotes. Even a small rate difference can make a big impact.
- Opt for shorter loan terms if possible. You’ll pay less interest over the life of a 3-year loan versus 5-year. Make sure the monthly payment fits your budget.
- Put down at least 20% if you can. You’ll avoid PMI fees and qualify for the best rates on any remaining balance. Some lenders offer special rates for certain down payment tiers.
- Look for promotions and discounts. Manufacturers and lenders both offer special rate deals around major holidays and tax season. Ask what current promotions may apply.
No matter your credit or down payment amount, using these strategies can help you find the most competitive rates. Spending time upfront to shop and compare saves thousands later. Monitor sites like Bankrate to stay updated on national auto loan rate trends and averages.
Top Lenders for Car Financing This Year
When it comes to getting the best auto loan rates and car financing, choosing the right lender can make all the difference. The top options this year are bringing ultra-competitive rates – an opportunity you don’t want to miss if you’re looking to purchase a vehicle.
Major Banks and Credit Unions
Large banks and credit unions (think Bank of America, Chase, Wells Fargo) typically have the buying power to offer very attractive new and used car loan rates. Credit unions in particular are member-owned nonprofits focused on providing value, so they should be on your list to check. Pre-approval is quick and tells you if you qualify.
Online Lenders
Internet banks like Lightstream, PenFed, and LendingTree make applying for financing convenient through online applications and fast approvals. With lower overhead costs than brick and mortar locations, savings may be passed down in the form of lower APRs. Just be sure to compare all terms like fees too, not only interest rate.
Manufacturer Financing
Don’t overlook 0% APR deals and other low-rate incentives offered directly by car manufacturers’ captive finance companies, like Ford Motor Credit or Toyota Financial Services. They want to move inventory off dealer lots, so take advantage! Just don’t get so caught up in special financing that you overlook the total purchase price.
Doing your research, assessing what rate you may qualify for based on credit score, and submitting multiple applications increases your chances getting approved for one of best auto loans this year. The competition between lenders is in your favor – take advantage! Test driving vehicles is way more fun when you’ve locked in attractive financing upfront.
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FAQs
Are car loans cheaper in 2024?
Auto loan interest rates have been rising steadily since 2021. However, experts predict rates will start to level off in 2023 before falling again in 2024 and 2025. So while a new car may still have a higher monthly payment than in years past, financing should get a little cheaper again soon.
What will the average new car loan rate be?
The average new car loan rate is projected to be around 4.5% for a 5-year loan in 2024, down from over 5% in 2023. Used car loans may be 1-2% higher on average.
How can I get the best rate on an auto loan?
To qualify for the lowest rates:
- Have a credit score over 720
- Put at least 10% down
- Choose a shorter loan term (3 years is best)
- Shop around with multiple lenders
- Consider buying at the end of the year when dealerships are trying to meet sales quotas
Online lenders often beat rates from traditional banks and credit unions.
Should I buy or lease my next car?
If you drive less than 15,000 miles per year, leasing can make more economic sense than buying. Make sure to negotiate the best possible deal. Buying still allows more flexibility and is smarter for high mileage drivers.
How much should I spend each month on a car payment?
- 10-15% of take home pay is reasonable
- Max out at 20% tops
This leaves room in your budget for other expenses and financial goals each month.
What’s better – paying cash or financing a car?
Paying cash is best if you have savings set aside. But with interest rates low, financing and investing extra cash can work to your advantage. Run the numbers to see what makes most sense for your situation.
Conclusion
So there you have it! By doing your homework upfront and shopping around for the best auto loan rates, you can save thousands over the life of your loan. Head to your local bank or credit union to see what kind of deals they can offer. And don’t forget to scour the web for online lenders that may provide even lower rates. The car buying process can be overwhelming but finding the right financing doesn’t have to be. Take your time, evaluate all your options, and let your budget determine what you can realistically afford. The right set of wheels is waiting for you at terms you can live with. Just stay focused on the best rate possible and enjoy the open road ahead!