If you find yourself in the market for a new or used vehicle, you might need to shop around for a car loan first. Shopping for a car loan will take a little time, patience and due diligence. Below are some tips to help make the process a little easier.
1. Get Pre-Approval
The best and most affordable way to buy a car would be to pay for it in cash. Unfortunately, most people are not able to do this and need to take out an auto loan to pay for their new or used vehicle purchase. To find the best rates and see what you can afford on your purchase, get pre-approval for your loan. When you are pre-approved, you will be able to use that as a negotiating tool at the dealership. You can check dlevans for car loans.
2. Review Credit
It is important to know what your credit rating is before you apply for financing. This will give you an idea of what interest rates you may be offered before you apply. If possible, work on raising your score before you apply for a loan. This can save you money on interest and make it easier to get approved. Consumers are able to get a free credit report from each of the top credit bureaus each year.
3. Compare Loan Options
If you want to find the best loan available to you, it will take a little comparison shopping. Comparing auto loan options can save consumers a lot of money. Apply with a few different lenders before settling on a deal. You can apply at your local bank or credit union or apply online through various lending institutions.
4. Improve Your Score
If you have bad credit or are not in a rush to purchase a new vehicle, take some time to work on your credit score. The better your score is, the better loan terms you will be able to get approved for. Even a small improvement can result in significant savings over the course of the loan.
5. Go With Short Loan Terms
To save more money, choose the shortest loan term you can comfortably afford. When you spread out your loan over a longer period of time, you will pay more in interest. However, the monthly payments will be lower and easier to budget for some consumers.
6. Put Enough Down
The more money you are able to comfortably afford to put as a down payment the better. Putting a large down payment will lower the amount of money you need to borrow and can save you significantly on interest. When you put a large down payment down, lenders will see it as a sign of faith that you are serious about paying your loan back. It can give you a better chance of getting approved.
7. Dealing With A Trade-In
If you are looking to trade-in your old car towards your new one, be sure you have a good idea of what it is worth before you head to the dealership. Two good places to start with are Edmunds and Kelley Blue Book. Have the transaction of your purchase of the new car and the sale of your old car done separately to save money. Consider selling your old vehicle yourself to get more money.
8. Review Financing Terms
Always thoroughly review the contract and financing terms before you sign. There may be hidden fees or costs you weren’t aware of. Do not allow a dealership to offer you a “pending approval” application before you drive away with your new vehicle. It is a sales tactic they use where they will deny you a few days later and arrange a new loan with higher interest. If you don’t accept the new loan, you may end up losing your trade-in, any deposit you put down and the cost of a rental vehicle.
9. Consider All Fees Involved
When figuring out the true cost of a vehicle you want to purchase, look past the sticker price. Consider the cost of repairs, maintenance, insurance, fuel efficiency and more.
10. Ask About Prepayment Penalties and Interest Calculations
No matter who how you end up financing your car purchase, be sure you ask if there are any penalties for paying off your loan early. Also, ask how they calculate the interest on your loan. Is it fixed or does it compound?