Most people who buy a car or truck need to get a loan to do so. Automobiles are expensive, and the vast majority of people can’t afford to or take the time to save up the money needed to buy one outright. When you are thinking about a car loan, you are probably wondering where to find one and where you can get the best auto loan rates. There are a number of options available, and which one is best for you and your situation can depend on a number of factors.

Bank

One of the most popular avenues for auto financing is traditional or online banks. Many banks like auto loans because they are shorter term, have decent rates and are backed by assets. If you want to get a car loan from a bank, it’s best to fill out an application and get pre-approved. That way, you know roughly how much you can afford to spend on a vehicle. You can visit banks in your area or fill out applications online for banks that specialize in online lending. You typically will have to provide tax and income information.

Credit Union

Another common source of auto lending is a credit union. For many credit unions, auto lending is their bread and butter. To qualify for an auto loan from a credit union, you have to meet the institution’s requirements for membership, which usually means living or working in its general membership area. Before applying for a loan, you will have to join the credit union, which typically entails opening an account with a token amount. Credit unions often are able to offer better auto rates than many banks, and you may be able to get discounted rates for having payments directly deducted from your account.

Dealer Financing

You also can finance your auto purchase through the dealer. Usually, the loan is coming from a bank or credit union, but the dealer does all the work of finding the loan for you. New-car dealers may run promotions where you can get below-market rates; these loans are subsidized either by the dealer or auto manufacturer to drive sales. Used-car dealers also may have their own financing programs. These often are targeted at people with poor credit who have trouble getting their own financing. One thing you have to pay attention to is the interest rate offered and any fees that may be included.

Considerations

There are a lot of factors to take into account when searching for the best auto loan rates. Your credit score plays a huge role in how much you can get approved for and what kind of interest rate you will get. Generally, the better your score, the better interest rate you can get. Other factors include how much money you make and what kind of down payment you are making. Another factor that affects loan rates is whether you are buying a new or used car. Loan rates generally are higher on used cars because the vehicles have a shorter lifespan, making them less valuable as loan collateral.

When you are budgeting for your car loan payment, make sure to take other things into account. For example, you will need to pay for insurance and car registration fees, and those costs are typically higher the more expensive the vehicle is. If you are buying a used car, the ongoing maintenance costs are likely to be higher than they will be if you are buying a new vehicle. These are factors that can affect how much you can afford to pay for a monthly car payment.