Trying to secure an auto loan can be a daunting task if you’re not prepared. Here are three tips that can help you secure a great car loan.
Know Your Credit History
Your credit report is one of the first things financial institutions are looking at when determining loan rates and terms. While a clean credit history is not necessarily a must to get approved for auto loans, it definitely plays a major part in getting the best rate. Check your credit report before making a purchase. That way you can dispute any errors in your credit file and figure out ways to improve your credit score. If your credit score is bad, you might want to consider delaying your car purchase and actively work on improving your score first. However, some lenders and car dealerships are used to working with people with bad credit scores and may be able to help.
Shop at Different Lenders
Now that you know your credit score, you’re ready to go shopping for a loan. Don’t just accept the first rate that is offered to you. Reach out to various financial institutions, such as your house bank, local banks, credit unions and online lenders to see what deals you can get. Of course, if you already found the car of your dreams at a dealership, you should also inquire about their financing. Often times, dealerships have connections with many different lenders that allows them to shop for the best rate.
Choose the Right Loan
Making a down payment is great for bringing down the interest rate and monthly payments. In addition to that, it’s choose a short-term loan as this means you will pay off your debt sooner. Also keep in mind that your vehicle is depreciating in value and you shouldn’t owe more on it than it’s actually worth. If you decide to sell your car in a year or two, you don’t want to have to worry about being upside-down on your loan.
Improve your credit score, contact different lenders and choose a short-term loan. If you keep in mind these tips, you’re more likely to secure great rates on auto loans.