Getting an auto loan can be a big part of buying a car. That makes it important to put in the time to shop around for the best possible deal, even before you start looking at cars. Use this article as a checklist and guide for finding the best auto loan.
Make Sure You Can Afford It
The first step to get the right car loan is figuring out exactly how much you can afford to spend and how much you’ll need to borrow. You’ll also want to consider how much it will cost you if something goes wrong with the car or if you have an accident that’s not your fault and need repairs. Although you’ll have insurance, you may need to pay some part of the bills yourself. A more expensive car will result in higher bills, so make sure to account for that.
Determine Your Credit Score
Before you start applying for loans, you’ve got to know your credit score. You can get your free credit report from Experian, Equifax, and TransUnion once a year. Alternatively, you can also pay for a copy of your credit report. If you notice that something is pulling your score down, work toward improving it since your score has an effect on the interest rates you’ll get charged.
Shop Around for Financing Terms
Once you’ve decided on how much you should borrow, compare loan terms from several lenders. Doing research on different lenders and credit unions is important because it helps you know where to apply when it’s time for financing and what kind of rates you should expect from each lender based on your credit score and other factors like income level or debt load (credit cards).
Get Pre-Approved
Next, go ahead and get pre-approved through your bank or credit union (if they offer this service). This way, when you’re ready to start shopping for a car, you’ll have a good idea of what your options are based on the amount of money you’ve saved up and any other debts that might impact your finances, such as student loans or credit card debt. Once you find a car that appeals to you, you can finally sign on the dotted line.
