bank rates

Late Winter Auto Loans Starting Below 2%

LightStream is offering borrowers across the country some of the best deals on new car and truck loans we’ve seen so far this year.

The online consumer lending division of Atlanta-based SunTrust Bank is offering borrowers with excellent credit who choose an automatic repayment plan 2- and 3-year car loans starting at 1.99% and 5-year car loans starting at 2.29%.

Compare that to the national average of just over 4% for 3- and 5-year auto loans, according to our national survey of lenders.

Rates begin at 2.49% and 2.79% for borrowers who don’t sign up for auto pay, which is still well below the national average.

Another thing that makes LightStream loans stand out is that they’re unsecured, which means there is no lien required for your car. Your vehicle is not collateral for the loan.

If you borrow $20,000 at 2.29% APR for a five-year loan, the monthly payment is about $353.

Borrowing the same amount at the national average of 4.07% APR for five years would cost you $369 a month.

The lower rates from LightStream would save you $16 monthly, which adds up to $960 over the entire loan. You save nearly a grand by going with the better rate.

You can use this auto loan calculator to help figure what your monthly payment would be for a new car or truck.

It will also help you see how the term and down payment will affect your monthly payment.

LightStream loans from $5,000 to $100,000 and the application, approval and funding process is virtually paperless. You apply online at the LightStream website and can receive a response in less than a day. There are no fees or prepayment penalties.

Financing is available in all 50 states but to qualify, LightStream says you’ll need “excellent credit.”

The lender doesn’t provide an exact definition of what that is, but it does say that you’ll need at least five years of significant credit history. And in all likelihood, “excellent credit” means that you’ll need a score in the upper 700s to low 800s.

To get the best rate, you also must allow LightStream to deduct the monthly payment from your checking account, which can be at any bank in the United States. You do not need to open a checking account with LightStream or SunTrust.

If you think you can find a better deal, go to Bankrate’s database of the best auto loan rates to find deals from other lenders in your area. It can help you see if you could score a better deal from another source.

Keep in mind that it’s always a good idea to put at least 20% down on a new car, even if it isn’t required. Then the instant depreciation of driving a new car off the lot won’t put you upside down on your car loan – you won’t end up owing more than the car is worth.

Indeed, that’s part of the 20/4/10 rule – a very useful way to figure out how much you can really afford to spend on a new car or truck. It says you should put at least 20% down on a vehicle, finance it for no more than four years and not let your total monthly vehicle expense exceed 10% of your gross income.

Having an idea of how much you’d pay for a loan at a bank or credit union means you can bargain better with a car dealer’s finance manager.

The dealer has to beat the loan terms, or you can go with LightStream for auto financing. Either way, you’ll know you’re getting a good deal.

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