There are several factors that influence the rate you'll pay and how you can get the best rate. Prime rate sets the stage for what interest rates will be. Lenders offer a variety of interest rates and packages based on the prime rate.



Market condition will also affect rates. If sales are down, you'll often see 0% or rates that are below prime offered by the big contenders. Zero percent is also used to help move cars that aren't as popular. When interest is reduced to very low rates, the term of the loan is usually reduced too. It's very common to see 0% offered on 2 or 3 year loans and then, as the term increases, so does the rate. Watch for these opportunities.

The type of car you are buying will also affect the rate. New car rates are usually lower than used car rates. As well, dealers often offer incentive packages on new cars where the down payment is waived or the term extended. They may also offer a better interest rate and sometimes the price of the vehicle is even slashed. And of course the lower the cost of the vehicle, the lower your payments will be.

Unless you've got cash in your pocket, you'll be borrowing from a lending institute. Automakers offer their own financing for convenience, and it is very competitive and convenient. However you should check with the bank you deal with regularly as you may find they offer you a better interest rate than the automaker plans.

Most times the rates offered by dealership financing are very competitive. The trick is to know and understand what's being offered and then negotiate the best deal possible. Don't just assume they'll hand you the best rate.

The length of the term will affect the rate you pay. The longer the term the smaller your payments are going to be, but the higher the interest rate. To get the optimum rate determine the size of payment you can afford and then calculate the term that payment size fits into. Don't go any longer than that.

Your personal credit rating also affects the interest rate you'll pay. The better your credit rating, the lower the interest rate will be. The Consumer Federation Of America says that only 15% of all car buyers actually qualify for 0% financing. So don't feel bad if don't make the grade.

If you know your credit rating and the interest rate you qualify for before you start shopping, then you can decide the term that works for you and the vehicle price tag you can afford in advance. Now all that's left to do is shop for vehicles in the right price range. When the right one comes along you'll know it. And now that you know how to get the best car loan you can be driving that new car off the lot in no time!