Looking to upgrade your ride? You may be asking: When is the ideal moment to buy a new vehicle?
It appears the present could be advantageous for buyers, according to WalletHub’s recently published auto financing report covering the first quarter of 2018.
WalletHub indicates that the auto market currently appears to favor purchasers rather than sellers.
“Interest rates for new vehicles are at one of their lowest levels in the past three years,” WalletHub states.
Keep in mind, however, that rates will differ depending on where you secure financing for your car.
WalletHub discovered that the most attractive interest rates for financing a new vehicle typically come straight from automakers — averaging about 1.87%. Credit unions provide the next-best rates — averaging 2.61% for new cars.
National banks generally offer more competitive rates than regional banks, and regional banks tend to beat community or small banks.
Those buying a pre-owned vehicle will observe similar patterns. Credit unions are likely to deliver the lowest interest rates, and national banks will surpass regional and community banks when it comes to favorable rates.
That said, interest rates for used cars usually run higher than those for new models.
For instance, the average rate at a credit union for financing a used car is 2.87% compared with roughly 2.61% for a new vehicle. Financing a used car through a regional bank carries an average rate around 4.73%, whereas a new-car borrower might receive a 4.01% rate at a regional bank.
Scoring the Best Offer
Deciding which car to buy is a personal decision, but WalletHub found that certain manufacturers tend to provide better incentives and clearer terms than others.
Among the 22 manufacturers evaluated by WalletHub, Nissan, Hyundai, Mazda, Ford, Subaru, Toyota and Dodge are currently offering 0% financing.
Shoppers who prefer leasing over purchasing will find Toyota, Hyundai, Lexus, Jaguar, Mazda, BMW and Subaru offering the strongest lease deals with rates under 4%.
WalletHub also assessed how transparent automakers are during the leasing process, using a 10-point scale. Infiniti, Mini, BMW, Mercedes, Honda, Volkswagen, Toyota, Nissan, Audi and Hyundai each earned a score of 6 — the top rating any manufacturer received.
Credit Makes a Big Difference
On the subject of scores, your credit rating will significantly influence how much you pay when buying a car.
Consumers with fair credit will ultimately pay roughly five times more in interest than those with excellent credit, WalletHub reports.
For example, a borrower with fair credit might incur $7,723 in interest over the life of a $20,000, five-year loan, while someone with excellent credit could pay just $1,456 in interest for the same loan — a gap of $6,267.
Check your credit score before beginning the car-buying journey (services like Credit Sesame and Credit Karma are useful). If your score could use improvement, here are some strategies to boost your credit.
Nicole Reed is a staff writer at Savinly.
