Need a New Car? How to Find the Best Financing Deal

Shutterstock The average American's vehicle is more than a decade old; interest rates have stabilized near historical lows; and the economy seems to be trending upward. So it figures that many of you are in the market for a new (at least to you) set of wheels these days. The question is how to find the right car and financing. Buy Used, Build Wealth Buying used a car and performing regular maintenance on your vehicle are some of the most financially prudent moves that a consumer can make. "By buying older used cars, and maintaining them a long time, you can revolutionize your family's saving and financial security," says Richard Serlin, director of the University of Arizona's personal finance program. "Doing this, rather than purchasing or leasing a new car every three or five years can save you $200 a month, or more. If you invest that $200 a month in a diversified stock fund and earn the long-run historical average of about 7 percent plus inflation, then in five years you will have an extra $14,000. After 10 years you will have an extra $35,000, and after 20 years an extra $104,000." Does Size Matter? Even if you're now convinced that buying used is the way to go, the classic question of where to obtain financing remains. The traditional answer -– the smaller the lender, the better –- doesn't necessarily apply to today's unprecedented economic landscape. Small, local banks actually charge 60 percent higher interest rates on auto loans than national banks and credit unions, according to WalletHub's 2014 Auto Loan & Lease Report. Credit unions tend to offer the best deals out of the traditional financial institutions, charging 44 percent less for used car financing than banks and offering repayment terms that are up to a year longer. Hit the Lot with Offers in Hand While you can also obtain financing through car manufacturers, dealerships are notorious for offsetting eye-catching finance charges with higher sale prices, often causing you to spend more overall. In fact, dealership financing operations have come under regulatory scrutiny for discriminatory pricing. It's therefore understandable if you're hesitant to shop for your vehicle and financing at the same place.