NEW YORK ( TheStreet) -- The Federal Reserve's moves to drive down mortgage rates have produced a great side effect for U.S. consumers -- record-low rates on car loans, too. "Auto-loan rates are the lowest we've ever seen," says Greg McBride of market watcher Bankrate.com ( RATE), which found that five-year new-car loans averaged 4.1% nationwide late last month. That's way below their long-term average of 7.5%. McBride attributes today's attractive rates mostly to the Fed's quantitative-easing efforts, in which the central bank has bought up billions of dollars of U.S. Treasury bonds and mortgage-backed securities.
Fed members are trying primarily to push mortgage rates down and boost the U.S. housing sector, but their initiative has reduced auto-loan rates even more sharply. Some car loans charge less than 2.5% annual interest these days, well below the current 3.7% average for 30-year fixed-rate mortgages. McBride says car loans are cheaper than mortgages because it's a lot easier to repossess a vehicle than foreclose on a home. "If you miss more than one car payment, your vehicle won't be in the driveway in the morning," he says. Here are five tips from McBride on how to get the best deals on car loans. Check your credit Start you car-shopping efforts by verifying the accuracy of information that credit bureaus Experian, Equifax ( EFX) and TransUnion maintain on you.
Any errors can disqualify you from the best loans, so go to the industry's AnnualCreditReport.com site and get the free copy of your credit reports that federal law entities you to once a year. If you find mistakes, file a dispute with ExperianEquifax or TransUnion.