Auto loans are cheaper and easier for every buyer to find this spring

Car keys on loan application

Auto loans have never been cheaper, and the prospects for landing a good deal are improving by the day, whether your credit history is spotless or spotty.

According to's survey of lenders across the country, auto loan rates are at record lows.

The average cost for new-car loans has fallen below 4.5% for 36- and 48-month financing, and below 4.6% for 60-month financing.

That's about 1.5 percentage points less than those loans cost last spring, a decline that means hundreds of dollars in savings for borrowers.

Here's why: If you finance $20,000 for 36 months at 6%, you'll pay $1,900 in interest over the life of the loan. If you're charged just 4.5%, the total interest cost is a little over $1,400.

That's a savings of nearly $500.

But you don't have to pay average interest rates.

Search our database of the best auto loan rates from more lenders in your area to see if you can find a better deal.

We've seen banks and credit unions offering car loans for much less over the past few months.

We've published Tips & Deals for auto loans that only cost 3% at Fifth Third, 2.73% at Chase and 1.99% at Pentagon Federal Credit Union.

About the only way to beat rates like that is with an absolutely free loan from your car dealer.

And that is doable -- at least on some 2011 and 2012 cars and trucks.

The best financing deals are always the deeply discounted loans automakers offer to boost sales.

All of those promotions are offered through finance companies affiliated with the car companies, such as Ford Credit or Toyota Financial Services.

The best of those deals is 0% financing, which remains the smartest way to buy a car -- even smarter than paying cash.

Any time you can use $30,000 of someone else's money for free, we say jump on it.

In mid-March, more than 100 models spread across 17 brands carried a manufacturer's 0%-financing offer. Nearly that many again could be financed with a rate of less than 1% -- still pretty good.

Here's where you'll find all of the discount loans, rebates and lease deals currently offered by the major brands.

Unfortunately, not everyone has the credit history required to qualify for 0% financing.

There are no hard-and-fast rules on how low credit scores can be and still win approval. But if you have below-average credit (a credit score of 670 or less), don't be shocked if you're turned down.

As Honda constantly repeats in all of its ads for discount financing, it's only available "for well-qualified buyers."

Having said that, it's definitely getting easier for buyers with poor credit to get auto loans and at slightly lower interest rates than lenders were charging last year.

When the recession unleashed a tsunami of delinquent auto loans and repossessions, banks, and even the independent finance companies that provide most bad-credit loans, stopped lending to all but the most qualified borrowers.

Now credit data expert Experian Automotive says declining delinquency and repossession rates have spurred lenders to loosen purse strings and relax their qualifications for borrowing.

The financing market is separated into prime credit (credit score above 679) and nonprime/subprime credit (credit score below 680).

In the fourth quarter of 2011, nearly 23% of all new-car loans went to nonprime/subprime borrowers, up from 20% in the final three months of 2010.

The average credit score for borrowers getting an auto loan fell to 761, down from 775 at the end of 2009, Experian calculated.

Although independent finance companies remain the friendliest toward nonprime and subprime borrowers, the interest rates can be much higher than those of banks or manufacturer finance companies.

The good news, however, for nonprime/subprime borrowers is that both banks and the manufacturer finance companies posted significant gains in making loans to borrowers with weaker credit.

According to Experian, banks increased their nonprime/subprime lending by nearly 18% from the end of 2010 to the end of 2011. Lending at the carmakers' finance companies was up by more than 11%.

More good news: Interest rates for nonprime/subprime loans are trending down.

Even those borrowers Experian refers to as "deep subprime," with a credit score below 550, have seen their average interest rate drop nearly a percentage point from 13.40% to 12.51% from the end of 2010 to the end of 2011.

Use our auto loan calculator to see how much your monthly payments will be for any deal you're offered.

If you've put off shopping for a new car because of shaky credit, you may be pleasantly surprised at the financing you'll find out there.

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