I am replacing my 5 year old car and buying a new one

[Cristen Wyght]

I am replacing my 5 year old car and buying a new one. But I want to compare auto loan rates and loan terms from multiple lenders first before getting pre- approved. Where do you think I should go for the best financing deal? Go to a dealer, bank or a credit union

[Petunia 100]

Go to BankRate and see what the best offers are. If you can beat it locally, that's great. If not, go with a national lender.

http://www.bankrate.com/auto-rates/?ic_id=home_smart-spending_auto_globalnav

[disneysteve]

I think you should look at a variety of sources including the dealer. There's really no consistent answer to "where will I get the best rate?". Sometimes the dealers have special deals that beat the outside lenders. Sometimes the dealers will match the offers you get elsewhere (I've had that happen personally).

Just make sure the loan is for no more than 36 months with a payment not exceeding 10% of your monthly income.

The other thing that I can't help but ask is why are you replacing a 5-year-old car? How many miles does it have? Is there a problem with it? And why are you buying new?

[Jluke]

go to the automobile manufacturers home page and look up financing details on the vehicles you are interested in.

For instance, Toyota has 0% on certain models; Honda is usually 0.9% or 1.9% depending on model. that is how you will most likely find the best rate.

Dealers also like when you finance using their manufacturer's financial services program.

I am in the camp of a 60-month loan term (esp at those low rates) but I usually pay them off in 4 years.

[disneysteve]

I am in the camp of a 60-month loan term (esp at those low rates) but I usually pay them off in 4 years.

The 3-year/10% rule is a measure of affordability. Run the numbers. If you could afford the payment within those guidelines but choose to take a longer loan due to attractive financing (especially 0%), I wouldn't argue with that. But don't use the 60 or 72 or 84-month term as a guide to what's affordable.

[bjl584]

Is there something wrong with your current car? You should be able to get another 5 years out of it.

But, I agree to stick to the 10%/36 month payoff rule when buying.
Your credit union might have better rates on a loan, but it really depends what you are buying and what incentives are going on currently.

[Jluke]

Guess I should ask:

Is this a brand new 2017 vehicle or a leftover 2016 being bought as new?

OR

Is it a "new to you" (used, CPO) vehicle?

if used, then my original suggestion doesn't apply.

[disneysteve]

if used, then my original suggestion doesn't apply.

The last 2 times we bought used cars, the dealer still had the best financing deal. We got 2.9% both times.

[james.hendrickson]

Guys,

To the OP: buy a great quality used car and pay cash.

On this point, I hope you'll excuse my posting articles from another blog wholesale here.

The Millionaire Next Door has heavily influenced my thinking regarding my own personal wealth building. One of the authors, Thomas J Stanley has a lot to say on the subject of used cars.

Here are some relevant excerpts from one of his blog articles. In a nutshell, the most economically productive (e.g. richest) households spend a great deal of time shopping for good quality used cars (among other good suppliers of services).

Millionaire Next Door Myth #4: Used Cars
By Thomas J. Stanley on Feb 28th, 2012 in Studying the Wea

lthy

Over time the facts and words found in The Millionaire Next Door sometimes get twisted. It is a myth that most millionaire next door types only buy used cars. In fact, for every one millionaire that is used vehicle prone there are two who tend to buy new vehicles...

When asked how he gets a “good deal” when acquiring a motor vehicle, the UVPS’s number one response is “buying used cars via aggressive shopping among private owners, dealers, leasing companies, etc.” But there is much more to this story than just the acquisiton of motor vehicles. The UVPS segment represents literally hundreds of productive habits, financial lifestyle patterns, and attitudes.

In fact, the UVPS segment is more productive in transforming income into wealth than any of the other vehicle acquisition groups among the millionaire population. Interestingly its members are more likely than the norm to have incomes under six figures. Most households in America will never generate a high income. Of course income is a correlate of net worth. But understanding this the UVPS members are determined to accumulate wealth via playing great financial defense, stretching their dollars of income in the most productive manners. For example, they spend less than 65% for their motor vehicles than is the norm for the other millionaire types...they live by the rule that:

The most economically productive people patronage the best suppliers of services.

The hallmark of this segment is its tendency to use high grade, locally owned independent repair shops for maintenaince, repairs, and evaluation of prospective vehicle purchases. As an important side note, UVPS segment also patronizes the top local/mom-pop appliance dealers and repair services, plumbers, electricians, roofers, etc. These suppliers charge less than more conventional service types. They consistently receive the highest evaluations for quality and integrity from the UVPS segment.

Linky: http://www.thomasjstanley.com/2012/0...h-4-used-cars/

[Jluke]

The last 2 times we bought used cars, the dealer still had the best financing deal. We got 2.9% both times.

Yeah, we've done the 0%, 0.9%, 1.9%, and 1.9% (4 cars in 6 years - 3 new, 1 used. I have 2 vehicles, my wife has 1 vehicle)

my Credit Union currently has:

1.49% for 1 to 36 months
2.49% for 37 to 60 months

[TexasHusker]

I am replacing my 5 year old car and buying a new one. But I want to compare auto loan rates and loan terms from multiple lenders first before getting pre- approved. Where do you think I should go for the best financing deal? Go to a dealer, bank or a credit union

Credit Union.

[TexasHusker]

As a side note, I don't feel it is our place to counsel the OP on whether to trade cars. That wasn't the question.

I get that the millionaire next door drives a jalopy. But this millionaire leases a Range Rover Sport and intends on getting a new one every 30 months.

Smart financial decision? Perhaps not. But I hopefully make enough smart financial decisions to help fund some indulgences.

Perhaps the OP is in a similar boat.

[thestrongprofessional]

Banks you should look into

Hey Cristen,

In my experience, credit unions were able to offer better rates than other banks. I personally took out a loan from pen federal when I bought my used car and was able to get a rate of 1.99% for 36. If you pay it off even sooner, you'll be able to save some money on the interest charges.

Thanks,

Raphael

[snafu]

I suggest while checking out rates at Credit Union [s], ask about their shares paid back to participants for the past 3 years. These rebates can bring down interest rate when cashed out.

[scfr]

Compare all options, especially when making such a major purchase. In addition to the options you mentioned, there are others such as paying cash.