Three Unexpected Ways To Get an Auto Loan

Are you second-guessing the auto loan options your dealership offered? If you are car buying or truck shopping, you have many other options for an auto loan. If you get approved before you choose the vehicle you want, you will have a lot more power to negotiate. Here are three unexpected places to get an auto loan.

3. Department of Agriculture truck loan

The USDA offers a loan for trucks used to transport farm commodities | Creative Touch Imaging Ltd./NurPhoto
A farm truck | Creative Touch Imaging Ltd./NurPhoto

Farmers know the United States Department of Agriculture (USDA) offers low-interest-rate loans with favorable terms. Many rural homebuyers prefer the USDA mortgage because it requires no down payment. But did you know the USDA might also finance your truck? If you are a farmer looking to transport commodities you produce, your next truck could qualify for a little-known USDA loan. That loan is the Farm Storage and Facility Loan.

Not only do you have to be a farmer transporting farm products, but your vehicle has to be specially designed to do so. This means no pickup trucks. But a chassis truck–even a compact truck–fitted with a flatbed could qualify. In addition, you might be able to finance a cargo van or box truck. This vehicle needs to cost less than $100,000 and the process will be much easier if it’s less than fifteen years old. Learn more about USDA truck loans.

2. A credit union

A credit union can offer a lower interest rate than a dealership or bank on an auto loan for your car or truck  | H. Armstrong Roberts/Retrofile/Getty Images
Shaking hands | H. Armstrong Roberts/Retrofile/Getty Images

Credit unions are one of the best-kept secrets in banking. While big banks must get money from their customers to pay their shareholders; a credit unions customers are its shareholders. This unique structure means a credit union’s mission is to serve its customers just as well as it can. For an auto loan, this often translates into lower interest rates, a lower required credit score, and a smaller minimum loan.

While credit unions may have once been difficult to join, the internet age has made them accessible. Many credit unions are based on where you live. Others depend on your trade or veteran status. Some newer ones only require you to be a benefactor of a specific nonprofit (at a cost of $5) to join. Looking into a credit union is downright convenient, and your wallet might thank you. Read more about a credit union auto loan.

1. Your checking account or credit card provider

Your checking or savings bank or credit card provide can also offer you an auto loan | William Gottlieb/CORBIS/Corbis via Getty Images
Waiting for a bank teller | William Gottlieb/CORBIS/Corbis via Getty Images

Most modern financial institutions offer auto loans. With so many options, which one should you choose? The answer may be right under your nose. Whatever bank you use for your checking account, savings account, or credit card is only a click away. What’s more, you have a relationship with them and they know your payment history. If nothing else, you might avoid downloading yet another app and memorizing yet another password.

Just be careful not to default to the first bank you talk to. Some institutions offer an auto loan rate query with a soft credit check. It’s a good idea to do a couple of these and begin to develop a budget. Then make a list of potential lenders.

When you are ready to pre-apply for financing, you can do several applications at once. These will count as a hard query on your credit that will affect your score. That said, you have a two-week window to complete as many applications as you want, and they will only count as one hit on your credit score. Good luck!

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