If you’ve been contemplating refinance your current auto loan rate or even if you’re looking to take out a new auto loan altogether you may want to move swiftly.
Auto loan rates, and interest rates in general, may be on the rise soon. Just a couple weeks ago they took a pretty big one-day jump by almost a half a percentage point. And while they’ve momentarily seemed to flatline again, many analysts expect a few more upticks before the end of 2013.
The last few years have been fantastic ones for those obtaining auto financing. Rates have sat at historically low levels and we’ve seen BankVibe readers lock in both new and used car loans under 2 percent APR.
Before you lock in an auto loan, however, make sure you factor in the entire cost of your car or truck and are 100 percent sure the payments will be manageable. Much like during the housing boom of the early 2000′s banks are once again eager to loan money to practically anyone and everyone in the market for an auto loan. Unlike loaning money to under-qualified home owners however, banks and credit unions can repose the assets they are providing the loans for much easier with auto loans. So while many of Americans have gotten away with missed mortgage payments during the recession, getting away with missed auto loan payments will be much more difficult.
How much can you afford?
They say with mortgage payments (or rent) you should be paying no more than 25% of your monthly earnings after taxes to cover these costs. With auto loans we recommend not going over the 10% mark (and this includes insurance). This will obviously vary depending on what other monthly commitments you have with your income, however, it works as a general rule of thumb. So if you bring in $3,500 each month after taxes you should be allocating no more than $350/month on your auto loan and insurance combined.
What rate can I expect?
We’ve scoured our database of auto loan rates in the general Los Angeles, California area this week to publish our top 5 auto loan deals of the week. Keep in mind the rates you are seeing displayed here are assuming a stellar credit score. Each state has a different set of rules determining how high your auto loan rate can be based on your credit worthiness, so even though a bank or credit union in LA may be advertising a 2.99% APR new auto loan, this rate could be significantly higher if your credit score is a little shaky. Check with each individual institution and get a customized rate quote based on your credit score.
Top 5 Auto Loan Rates in Los Angeles Area:
1. First Entertainment Credit Union – featuring auto loan rates as low as 1.49% APR. Call 888.800.3328 for details. Rate of 1.49% APR is also the preferred rate for used (maximum age 6 years old) vehicles up to 48 months at a monthly payment of approximately $21.48 per $1,000 borrowed. Amount financed may not exceed the MSRP or 110% of the high Kelley Blue Book NADA value for new (100% for used), including tax, license, GAP Insurance and Mechanical Breakdown Protection.
2. USAA Federal Savings Bank – featuring auto loan rates as low as 1.49% APR for 36 month terms and 1.75% for 60 month terms. Apply online or call 1-800-531-USAA (8722) for further information.
3. American Airlines Federal Credit Union – featuring auto loan rates as low as 1.99% APR for 36 month terms. Apply online or call (800) 533-0035 for further information.
4. Western Federal Credit Union – featuring auto loan rates as low as 1.74% APR for 36 month terms. Apply online or call (800) 533-0035 for further information.
5. Bank of America (Los Angeles branch) - featuring auto loan rates as low as 2.24% APR for 36 month terms. Apply online or call (866) 345-1248 for further information.
If you know of a better new or used auto loan rate from a local bank or credit union in the greater Los Angeles area, please share by leaving a comment.