Fishing Frenzy

Purchasing vehicles on credit has become the norm these days, which means that there is a lot of lending done every year for the purpose of buying cars. Because of the big market, there are lenders that are good and others that are not so good. When taking out auto loans, it pays to look around.

One of the major places where people get snared are dealerships. Because dealerships often advertise very good deals, people assume that they are getting the best deal when financing through a dealership. This often is not the case, because dealerships offer amazing deals to people with perfect credit, but actually have high interest rates for everyone else in most cases.

The second-most common place to get a loan is the bank. This can be a good option, especially if you have a good record at the bank but less than wonderful credit overall. The bank may consider your standing in their own good books when deciding whether to extend you credit, as well as your overall score.

Credit unions are one of the best, most underutilized places to find car financing. Although a very small percentage of people finance their vehicles through credit unions, those that do get some of the best interest rates. The same benefits of having a good history with a credit union may apply as with a bank. Often, membership only depends on residence.

Be sure to get pre-approved before going shopping. This ensures that you don't find the perfect car and be disappointed. It also helps prevent you from taking out a dealership loan with a high credit rate, just because you want to get it done, or because it is the only one you are approved for.

If you are not sure whether you are eligible for any auto loans, ask the loan officer at your bank or credit union to go over it with you. These people deal with the subject day in and day out, and can give you tips on how to improve your credit if necessary. They can also help educate you about what a good interest rate is, and explain other parts of the lending process.