If you’re a Milwaukeean in the market for a new car, you likely need financing. There are many factors in qualifying for an affordable car loan, including your credit score, your income and how quickly you can pay back your loan. Our partners at ConsumerAffairs researched the best car loans in Milwaukee to help you secure the best rate possible.
If you’re shopping for a new vehicle in Milwaukee, it’s likely you’ll need to arrange for an auto loan. Car loans can be obtained from multiple different avenues. Banks, credit unions and online lenders are popular options, and it can sometimes be convenient to get financing through a car dealership or manufacturer, although these options might require excellent credit or have higher interest rates.
It’s a good idea to get pre-approved for a car loan. Pre-approval from a lender is a simple way to secure your financing before shopping for a car. Once you’re pre-approved, you have the cash available to purchase a vehicle. Getting pre-approved lets you lock in an interest rate, compare multiple loan offers, keep within your budget and have a stronger negotiating position when shopping for a new car.
Qualifying for a car loan in Milwaukee
To qualify for an auto loan, you’ll need to provide the following:
Proof of residency: Lenders need to know where you live and your contact information. A utility bill often serves to prove residency.
Identification: Unless obtaining a loan from a bank you already do business with, lenders will need full proof of identity. This means a photo ID with signature and another form of identification such as a matching utility bill, passport or government issued ID.
Proof of income: Pay stubs or bank statements usually work, but some lenders may want verification from your employer. You may also want to list any additional debts you have such as credit cards, other loans and mortgages.
Insurance coverage: You need to have proof of vehicle insurance to secure an auto loan.
Trade-in documents: If you’re trading in your old car, you need to provide the title and registration.
Comparing car loans in Milwaukee
Many different factors go into determining the annual percentage rate (APR) of your car loan. To get the lowest rates, you need a good credit score, a low debt-to-income ratio, a shorter loan term and a substantial down payment. Milwaukee residents with good credit scores can expect an average APR of 3.6 to 4.9 percent, while those with low credit scores receive rates in the low-to-high teens.
Besides APR, be sure to consider:
Loan term: Most auto loans are paid off monthly over 36 to 72 months. Longer car loans have lower monthly payments but cost more over the life of the loan because of additional accrued interest.
Down payment: The amount of money you put down (upfront) also factors into your monthly payment; a good starting point for a down payment is 10 percent of the vehicle’s value.
Additional fees: Lenders may charge upfront fees such as a loan referral or documentation fee. Be sure you know what additional costs apply to your loan.
Prepayment penalties: Find a lender that allows you to pay your loan off early if you choose. Some lenders charge penalty fees if you pay off your loan before the term is up.
Getting a car loan with bad credit in Milwaukee
It’s not impossible to obtain a car loan with a poor credit score or no credit history, but it is more difficult. Lenders view Milwaukee residents with low credit scores as high-risk borrowers and require larger down payments. Interest rates for those with bad credit can skyrocket up to 15 percent, which is not much better than most credit cards.
If you have poor credit, it’s helpful to pay off any debt you can before applying for an auto loan, save up for a larger down payment and ask for a shorter term. If you’re rebuilding your credit but can’t wait to take out a car loan, you can refinance your loan later for better terms.
Another option is to have a friend or relative with a high credit score co-sign your loan. This reduces the lender’s risk and makes it more likely you’ll qualify for a loan or receive lower interest rates, but your co-signer is responsible for your loan if you default.
LightStream is a division of SunTrust Bank that provides auto loans. The lender offers same-day funding and competitive rates with a variety of term lengths, and it guarantees to beat any competitor’s qualified offer. Milwaukee customers say that LightStream is easy to work with and simplifies the lending process.
Auto Approve specializes in refinancing Milwaukee residents stuck in high-interest loans. Auto Approve provides a quote within minutes and takes care of the process for you, helping you find the best loan possible. Milwaukee customers say that Auto Approve’s application is smooth and easy.
LendingTree is an online marketplace for auto loans that allows you to compare rates and loan terms from multiple lenders. LendingTree’s extensive lender network lets the company work with consumers with different needs and credit scores. Milwaukee customers appreciate being able to compare loans and read customer reviews of each lender.
myAutoloan.com is an online direct-to-consumer marketplace that allows you to obtain up to four competing loan offers. This company matches you with a lender that fits your needs. Milwaukee customers say myAutoloan.com is a simple and convenient option for auto loans and refinancing.
Capital One is a national bank that offers car loans and refinancing. This company can help you get pre-qualified for a loan at no risk to your credit score, and its website has useful tools and a loan calculator. Milwaukee customers say Capital One helped them find the perfect loan without the hassle.