To get a good interest rate on a loan for a used car, boost your credit score, and compare rates from credit unions, banks and the dealership, says Cars.com. Also, look for loans on newer cars versus older cars, and take out loans for a shorter amount of time.
The longer the car loan, the higher the interest rate typically is, explains Cars.com. Shoppers with better credit ratings also qualify for the best rates and loan terms. Credit unions are a good place to start looking for the best interest rate, as their terms tend to be more friendly than those of banks. Credit unions are also more willing to work with shoppers who have subprime credit histories, particularly if one-time situations such as a divorce or medical event triggered the credit issue.
While finding a zero-percent deal for a used car at a dealership is not common, dealerships do occasionally offer such deals on certified preowned stock, explains Cars.com. In such cases, a customer needs to arrange the loan through the dealership to achieve that interest rate. Banks and credit dealerships do not offer such terms.
A customer who tries to get a loan deal at a large used-car dealership may also have a better chance of a lower interest rate versus getting a loan at a smaller dealership, according to Cars.com. Larger places can afford to take more risks and are familiar with more lenders.