When researching finance options for new or used car purchases, bank auto loans are definitely something to consider. Banks typically can offer interest rates that are more competitive than finance companies or captive finance companies, unless the manufacturers are running a large discounted interest rate sale. Nevertheless, banks often offer good rates to those who qualify. Once the bank offers you an interest rate, they generally don't like to negotiate very much. Sometimes it takes some effort to get your bank to offer the best interest rate that they have available.
Working with Your Bank
If you apply for a new or used car loan with your bank, and are not pleased with the interest rate they offer you, there may be a few things you can do to help reduce the rate. First, ask the loan officer at the bank how they arrived at the interest rate you are offered. If they tell you the rate was based on your credit score, ask them to point out the parts of your credit report that caused them to arrive at such a rate.
If they tell note you have account balances that are a little higher than they like to see, ask them what paying down those accounts will result in - as far as an interest rate. This may or may not convince them to offer you a slightly lower rate, if you are indeed willing to pay down some of your higher credit card or account balances.
Another thing to consider is offering a larger down payment. Sometimes, banks are willing to negotiate lower interest rates for loans they have less risk on. For instance, if you want to purchase a car that costs $20,000, and are only making a down payment of $1000, then the bank will not feel nearly as secure as if you were making a $5000 down payment. The reason for this is quite simple. When you make a larger down payment, the bank has less risk. When the bank has less risk, they are willing to give you a lower rate.
Often the Bank Incentives
If you walk into any bank and apply for a loan, you may or may not be approved. If you have excellent credit, you'll probably be approved. However, the rate may not be as low as it could be. When you apply for an auto loan with a bank, it can sometimes help to offer them other types of business.
Ask if opening a checking or savings account will help reduce the rate by half a point or so - sometimes, it does. The more business the bank does with you, the more likely they are to give you a better deal. If you already have established accounts with a particular bank - they should be your first stop. If you're not happy with your current bank or you don't want to apply for a loan from them, then you should consider giving the bank that makes an auto loan to you a little more of your business.
While none of these methods are guaranteed to work, they have been effective for many people. Before you even apply for an auto loan, know where you stand with your credit scores. Approach the loan officer and speak with them about your needs. You will be surprised how an open and honest dialogue with the loan officer will help you in getting the rate that you want.