Auto Loans

One of the biggest investments you will make other than buying a home is buying a car, and of course while paying cash is a really great idea, more often than not, a lot of people need to obtain auto loans to pay for their car. These loans come with interest as time goes on, therefore, it is best that you are prepared and have all the right information before taking on an auto loan.

Things To Know For Auto Loans

  1. Know the right credit score 

Your credit score determines whether you will get a loan or not as well as they type of loan a lender will give you. Whether your lender is a bank, an auto dealership or an auto loan lender, the rate on then loan you will get is hugely dependent on your credit score. Different lenders have different criteria of approving loans, deciding what type of loan to offer as well and the interest rates to place on the loan. So, different companies will have different minimum credit scores too. Do your research on the minimum score your desired lender may require and if you do not know your credit score, you can request for it from the major reporting bureaus free of charge.

  1. Apply for auto loans during a two-week time span

When lenders check your credit history, your credit score will decrease slightly but if your application is within a 14-day window, the negative effects can be minimized. There is a 14-day shopping period for FICO scoring so all inquiries into credit history will be seen as one. 

  1. Get a pre-approval first before you go car shopping

Get a financing offer from your lender or bank before you walk into an auto dealership. With the pre-approved offer in hand, you can convince anybody that you have enough to cover the cost of the car you would like to buy. You also get leverage because you will be treated as a “cash buyer” and ultimately gives you a stronger negotiating power. You can get pre-approval from credit unions, online lenders and banks.

  1. Calculate the cost before agreeing to anything 

Before you say yes to a specific amount on your car payment, you need to know all the factors you should consider when setting your monthly payment. The effect of the APR rate on the amount you pay per month is minimal. The important factors include how much loan you need, for how long you would be paying back the loan and if you have a down payment.

Finally, When Looking For An Auto Loan ….

  1. Know about dealership financing 

Dealership financing usually comes in an attractive form and getting deals like huge cash back rebates and zero percent financing may sound like the best option but they ultimately reduce the amount of your loan. Do note that the special financing options are only available to the most qualified buyers. Should your credit report read negative or you get a low FICO score or your credit experience is limited, special financing options may not be available for you. No matter what, in the process of shopping around, do not accept the first financing option offered to you. There are chances that you would get better ones moving forward.

Getting your new car does not have to come with too much sacrifices and a great way to make sure of that is through getting an auto loan.