Applying for an auto loan is the best thing you can do for your wallet. It just takes a couple of hours to shop around for a good deal. When you’re shopping for a car, you already have either the perfect car in mind or a pretty good idea of what you want. A car loan helps ease the burden of paying for that car. Here’s how to apply for one.
Focus on The Overall Cost of The Car
The total cost includes the price tag plus your monthly instalments on a loan and the interest you pay. This gives you a firm idea of your budget. Too many buyers focus on the monthly instalments they can afford and ignore how long they would take to pay off that loan. Car dealers know this and will try to sell you a car which fits your monthly budget but doesn’t take the duration of the loan. It’s an easy trap to fall into. Have a solid hold on your budget and you’re more likely to get a loan that isn’t packed with unnecessary features.
Work on Getting a Good Credit Score
If your credit score is less than ideal, you will get hit with higher rates. Take the time to work on your credit. A good credit score can be used as leverage when you’re negotiating with lenders. In many cases, it’s your golden ticket to getting a car loan with amazing terms.
Collect Quotes
Go through the websites of banks, credit unions, dealerships and online lenders and get a good idea of what the going rate is for a good car loan. As with any product or service you buy, having an intimate knowledge of the market place gives you a great advantage in any negotiation.
Get Pre Approved
Preapproval on a car loan doesn’t hold you to the loan. It simply means that the lender has given you a quote for the loan. You typically get a letter (pending credit checks) that you can take to the car dealership. Many buyers use their preapproval letter to get a good deal on a car they like. A preapproval letter isn’t a guarantee. You can still choose to approve the loan or not.