How to Find the Best Car Loan

With the average price for a new car reaching $49,740 in December 2024, according to Kelley Blue Book, it’s no wonder that 4 out of 5 car buyers rely on loans to purchase vehicles. 

But what’s the best financing option for you?

Car shopping can be stressful and time-consuming, and shoppers often don’t consider financing until they’re in the dealership. However, shopping for a loan even before you take a test drive can give you more flexibility and save you thousands in interest.

How Do I Shop for a Car Loan?

Many financial institutions let you seek pre-qualification for your vehicle purchase before you even get to the lot. This process lets you:

• Know your budget. Learn exactly how much you can afford and estimate your monthly payment.
• Avoid impacts to your credit score. Pre-qualification usually takes place without affecting your credit.
• Compare lenders. Shopping around for the best loan rates can save you money.

To pre-qualify for a loan, you’ll provide lenders basic information such as your income and expenses. Then, they’ll calculate what you can safely borrow. 

You can get a loan for either a new or a used car.

Once you find your dream car, you’ll complete a formal loan application to lock down your financing.

What Will I Pay?

Your monthly loan payment depends on:

• Loan term: Most car loans range from 36 to 84 months (3 to 7 years).
• Interest rate: Lower rates typically go to borrowers with higher credit scores.
• Down payment: The more money you put down up front, the less you’ll need to borrow. 

Lenders reserve their lowest interest rates for customers with the best credit scores. You’re entitled to check yours for free once a year through AnnualCreditReport.com, a service authorized by federal law. In general, scores of 750 and above get the best offers.

You can finance up to 100% of the purchase price of your new vehicle at Adirondack Regional FCU, including sales tax, as long as you’re paying market rates for your vehicle. 

(Curious what you might wind up paying? See our Loan Calculator below.)

Why Choose a Credit Union?

Credit unions like Adirondack Regional FCU often offer rates competitive with, if not better than, commercial bank alternatives. (If you haven’t looked recently, we recently cut our new- and used-car rates.) That may seem counterintuitive; how can a small local provider out-do a national operation?

Credit unions are non-profits owned by their members. Surpluses are returned to those members through lower loan rates and higher savings returns. At commercial banks, profits go to shareholders.

Competitive rates are just part of the deal at a credit union, though. Working with a local institution means that you’ll have somebody to speak with if you ever run into financial difficulty. Negotiating repayment options is often easier with a local lender. 

But the most valuable reason many people cite for banking with a local credit union is keeping the money you repay in your community. While major lenders operate all over the country, credit unions like Adirondack Regional invest in your neighbors.

What Happens When I Use a Dealer?

You may still want to opt for dealer financing. It’s faster: Generally, you’ll get an answer while you’re waiting in a salesperson’s office, and you can drive away the same day.

It may even be cheaper. Car manufacturers often advertise ultra-low rates of 2.9%, 1.9%, or even 0% financing. If you have exemplary credit, you may qualify for those special offers. That’s tough for any lender to beat. If you don’t qualify, though, be careful: The rates you’re offered may be far higher.

And while dealers may entice you by reducing your monthly repayment, the loan terms often extend to six, seven, or even eight years—ensuring you’ll pay thousands of dollars in extra interest, even if the purchase price doesn’t change.

If you go to a dealer with financing from a bank, credit union, or other lender in hand, though, you can use that as a negotiating tool. There’s no need to settle for a high dealer interest rate if you have a better offer on the table.

On the other hand, if you have poor credit, many financial institutions may be unwilling to extend a loan. Many car dealers specialize in offering credit to high-risk borrowers, but at a price: Expect to pay rates of 10% or more if your credit rates are below-average.

(A note: While getting financing through a dealer can be a same-day process, you’ll have to go back to an outside lender with all the details of your purchase before you get a loan. That can add a few days to the process.)

Pre-Qualify Today

Get a head-start on your car buying process by pre-qualifying for an auto loan from Adirondack Regional FCU. In most cases, we’re able to give you an answer in less than 24 hours!