It’s always a good a idea to shop around for the right car loan, but it isn’t always easy. Picking out the right car for yourself and lifestyle can be hard enough. To add in the right loan with the best rates can complicate any situation. Recently, MIT’s Sloan School of the Management and Brigham Young University Marriott School of Business did a study. Researchers at the school analyzed over four million car loans. The loans were in over three hundred types of banks and institutions.
The researchers compared decisions made by customers by the borrowers who fit the same profiles. The borrowers that provide the same patterns were determined by the customer’s location. Comparing the rates that the borrowers offer as well as their credit scores. However, the results show that most customers do not shop around for different car loan options.
Research Says To Shop Around For Car Loans
The group of researchers stated approximately eight-percent of all borrowers in the research did not begin a credit with the least available loan cost.
The borrowers that accepted the increased interest rates would end up purchasing vehicles at a lower value, according to researchers. This information wa very important for the researchers. The group of researchers analyzed that one in four people who have an increased interest rate will are a bit more flexible. They also spent significantly less on their purchases than those whose rates were lower. They are more willing to get a car that is a model year older. Although, for the few of customers who did shop around for lower interest car loan rates ended up saving over seven-hundred dollars in the length of the car loan payments.
Many buyers believe that if they go to different banks and credit unions asking for loans, that they will be offered better rates. However that is not always the case. They also believe, for some reason that the checking account at their personal bank or credit union, will give them better rates than other banks. Research found that not to be true either.