Don’t Forget, You Can Shop at Car Loans
When they step into a car dealership, car buyers usually focus on bargaining for the best price. But don’t forget: car loans can also be bought .
If you are looking to finance your car rather than buying it straight away, it is easy to assume that you will have to go for dealer financing. But, as recent research shows, it’s important to keep an eye on the products.
The study was co-authored by professors from MIT’s Sloan School of Management and Brigham Young University’s Marriott School of Business. They examined data on more than 4 million auto loans issued by 326 different financial institutions in the United States. According to the press release, several interesting findings have been drawn:
Finding problems — including the time and hassle of finding and applying for alternative financing options — greatly reduces the likelihood that consumers will receive the best interest rate for their credit profile.
Less than 20 percent of borrowers in the study sample successfully obtained a car loan with the lowest available interest rate …
Most borrowers will only need three interest rate quotes to get close to the best rate.
As Professor Christopher Palmer of the Massachusetts Institute of Technology noted, “Consumers are often not looking for lower interest rates. It can be an expensive choice – small differences in monthly payments do add up and many people find they can afford a newer car when they get a higher rate. “
The next time you go to the market for a car, let this be a reminder to shop. Check the car loan conditions at the branches of local banks and credit unions. It will take a little longer to get multiple offers, but the money you save on interest is well worth it.