HOUSTON – Devin Strahan is on the hunt for a new ride.
He’s looking to buy a much larger vehicle, an SUV, to help him out with his brand-new business venture. It’s a wine-based, hard root beer he created with his name on it: Devin’s Spiked Root Beer.
”I’m looking for something that’s for size, like an Explorer, a Tahoe. I always have to do taste-testing demos. I have my product and my tent in the back, so I need adequate space and size,” Devin said.
So far, Devin’s had no trouble finding the SUV he wants. He’s settled on the Chevy Tahoe.
What’s blowing his mind is the price of financing a car right now with auto loan interest rates zooming into the red zone.
”It’s scary. They’re looking at like 7 or 8%, you know they are ridiculous right now,” Devin said.
The fact is right now, the average 60-month new car loan rate stands at a staggering 7.4%, according to bankrate.com.
Just last year, it was 4%, so the interest rates have nearly doubled.
What that means for you is that the average monthly payment for a new car loan is now $733 a month-- that’s the average!
And 1 in every 6 new car buyers are now paying more than $1,000 a month in car payments.
“This is the most rapid rise in interest rates we’ve seen in the past 40 years. It is really staggering because these costs are approaching a monthly mortgage or rent payment,” Ted Rossman of bankrate.com said.
Now working with Ted, finance and credit expert with bankrate.com, KPRC 2 Investigates is about to show you five solutions to getting the lowest possible auto loan rate on your new car.
First up, it’s the auto loans marketplace Autopay.
Here, they can help you comparison shop multiple auto loan lenders at the same time, with rates that start as low as 4.67%.
”Yes, at Autopay they work with a couple dozen different lenders. Think of shopping online and comparing airline prices or rental car prices, that’s what they offer. I think this could be worth looking into given their rates,” Rossman said.
Next, check out Navy Federal Credit Union, where they are offering 60-month new car loans as low as 4.74%
”You do need a strong credit score to get that rock-bottom rate. Navy Federal is available to about half of all Americans. If you served in the military, you qualify. But the good news is also that family members qualify. So even if you had a grandparent who was in the military, you qualify.
Our next low-priced auto loan comes from right here in Houston. It’s the Space City Credit Union, which is offering 60-month auto loans as low as 4.99%.
“This is a great option for Houston-area residents as well because the Space City Credit Union is open to anybody who lives or works or worships in Harris or Brazoria counties,” Rossman said.
Solution number four comes from yet another popular credit union. It’s the PenFed Credit Union auto loan with rates that start as low as 5.49% if you use their car-buying service, or as low as 6.09% if you buy the car on your own.
”The fine print here is of course that you have to use their car-buying service to get the very lowest rate rather than just selecting a dealership you find on your own and this is one of these credit unions that has really broad membership. In fact, they recently broadened it. You used to have to have ties to the military. Now, it’s actually open to anybody,” Rossman said.
Our final solution? Why not forget searching auto loans altogether and consider taking out a personal loan to finance your car through a company like Upstart?
“Yes, it’s kind of unconventional to use it for a car purchase, but the industry has been moving more in this direction. You can potentially take out a personal loan and buy a car and the lowest rate I’ve seen is just 4.6% from Upstart. The asterisk here is you need to ask if they have an origination fee you have to pay and how much is that fee,” Rossman said.
And with that, having heard all five of these interest rate-lowering solutions, Devin pours himself a drink of his signature beverage.
He now plans to check out each and every one of our five solutions and he makes this promise to himself.
”Well, there’s either you’re going to pay 7 or 8% or you’re going to do your homework and pay 4%. I’ll take my time and go with the 4%. I think other people should do the same,” Devin said.