Car Finance Rate - Finding the Best Car Finance Rate for Your Budget - Where to Find Rates, Picking the Best One

If you’re in the market for a car loan, doing your homework definitely pays off. You’re dealing with a big decision that will affect your life for months or years to come, and just a few percentage points can make a big difference. Use this guide to find the best rates and figure out what they mean to you in terms of actual dollars.

Where to Find Rates

There are some stellar services online like Bankrate.com’s Compare Auto Rates tool. This tool searches your area by zip code and tells you real-time auto loan rates from multiple competing banks. Just be careful – like it says on their site, if a rate seems incredibly low compared to the others, there’s probably a catch! Read through the details and make sure you understand the loan terms before signing anything.

Picking the Best One

Different banks have different terms on their loans. Some charge fees just to process the loan, others are fee-free. Some banks will offer a small discount on interest if you agree to use an auto-debit program. (Where they take the payment money directly from your checking account every month.)

Usually a small up-front fee is worth a significantly lower interest rate. Just make sure you understand the terms and conditions of the loan – if you start missing payments, some loan terms can have especially harsh fees and even higher interest rates. Be especially careful of these, so your new car doesn’t become your prison!

Translating it to Real Dollars

Now that you have a rate, you can figure out how much money you would actually be spending every month on the car of your dreams. Use Yahoo Auto’s Car Finance Calculators to figure out how much car you can afford and what your monthly payments would be.

Keep in mind that it’s always good to live well within your budget! Unexpected repairs can end up costing a lot of money. If you’re already at the breaking point with just your car loan payments, you’re not going to be a happy camper when the transmission seizes!