How to Compare Auto Loan Rates in Oregon


Buying a car is exciting, but right now, it can be a pricey proposition. Car prices have skyrocketed for both new and used cars due to a variety of factors. As a result, investing in a car purchase can make some buyers nervous. In order to ensure that you’re always getting the best deal possible on your car purchase, and not paying more than you have to, it’s important to know how to compare auto loan rates. Oregon shoppers—and shoppers around the country—should read on to learn just how to do this.

Why Are Cars So Expensive Now?

The average price for a new car in Quarter 1, 2021, was $37,200, which represents a year-on-year increase of nearly 8.5 percent. It isn’t just new cars that are feeling the price push, though. Because new cars are more expensive, people are more inclined to try buying used cars, making those more expensive too. But why is this happening in the first place?

There are a number of reasons for the increase in car prices.

  • Global pandemic. There’s no getting around this one: the pandemic changed much of our lives last year. Layoffs, temporary furloughs, and the rise in popularity of remote work from home meant that car sales had their worst year in over a decade. Now, as places start to reopen and people go back to working in offices, car purchases that were put off last year are being made en masse, creating a truly sizzling car sales market. Ordinarily, that wouldn’t be so bad, but …
  • The semiconductor chip shortage. For a number of reasons that are far too complex to get into in this article, the world is currently in the midst of a severe shortage of semiconductor microchips. Microchips are in everything from phones to toasters—if you were out of luck trying to get a PlayStation 5 for the holidays, this is why—and they are absolutely in current car models. New car production in North America and around the world has fallen by millions of units as a result.

Combined, you get a rise in demand paired with a reduction in supply, and as any beginner economics student can tell you, this is a recipe for skyrocketing prices.

Auto Loan Rates Matter

Car prices are high now, and it doesn’t seem like they will drop significantly in the near future. For that reason, it’s more important than ever before to ensure you’re getting the best auto loan rates in Oregon or where you live.

But car shopping can be stressful, and it can be tough to know what the true financial damage to your wallet is going to be at the end of the day. It can feel like dealerships want to nickel and dime you with options and services you don’t need. But getting the best auto loan rates means knowing what to look for. Here are five things you should always consider when comparing car loans from different institutions.

How to Compare Auto Loan Rates

When trying to compare auto loan rates to each other, it can feel overwhelming to do the comparison in a holistic manner, comparing every moving part of one loan to every part of another. Therefore, one good tactic is to look at the auto loan in its separate parts.

#1: Money Down

This is often the easiest part of the loan to compare because it’s quite simple. How much money does each lender require you to put down in advance? If one asks for $2,000 in cash and another asks for $4,000 in cash, then that could be a significant boost in the former’s favor. Many Americans would find it much easier to pay less money down. However, the cash up-front is only a small part of the auto loan over the months and years to come.

#2: APR

The APR, or annual percentage rate, is the rate of interest your loan will grow by on a year-by-year basis (as compared to month-to-month increases). Interest is how lending institutions make money on your loan. The higher the APR, the more you’ll pay over time. If we take our two hypothetical loans from before: the $2,000 loan might have a significantly higher APR than the $4,000 loan, making it a much less attractive deal a decade from now.

#3: Total Price

At the end of the day, how much is each car costing you? It’s easy to calculate the ultimate sum a loan will run you when everything is said and done. We recommend using one of the many auto loan calculators available online to get a full, complete sense of what you’ll be paying over the life cycle of your auto loan. This takes into account the money down, APR, and length of the loan itself.

It can be tempting to just look at the final price at the end of the day and go with the lower one, but sometimes even that isn’t the be-all and end-all of how affordable a loan is.

#4: Monthly Fees

For most of us, loans—be it auto loans, mortgages, or otherwise—are experienced not in their totality but in the month-to-month payments. A loan with a longer term, for instance, will cost you more in total over the life of the loan but may have more manageable payments that are easier to fit into a budget.

Let’s take two example loans, both for a new car of $37,000. Both have an APR of 6%. The first loan has a payment period of 5 years, while the second has a payment period of 10 years. In total, the first loan pays much less, just under $43,000, while the second is paying over $49,000. However, the 10-year loan is just $410 a month, compared to $715 for the shorter-term loan. For many Americans, that lesser monthly payment is going to be much easier to absorb.

Calculate what you’ll pay every month and what you can fit in your budget.

#5: Intangibles

This is where everything else goes. For instance, if you come into money (say an inheritance), can you pay off your debt in a lump sum? What happens if you pay extra every month? Talk with the officer at your lending institution about the fine print—the small details that could tip the scale either way.

Because getting an auto loan in Oregon or elsewhere can be complicated, it’s important to have a lender you can trust. If you want to buy a new or used car and need an auto loan, contact Central Willamette Credit Union today to learn about how we can help you afford your brand-new ride.