Auto Financing: Step-by-Step Guide
Financing a new or used car purchase can seem daunting, but it doesn’t have to be. Smart car buyers know that finding the right loan is key to getting the best deal and avoiding overpaying. Here are five steps to take when financing your new or used car.
Learn the Lingo
It’s not fun (we know!), but if you want to make an informed decision, it’s important that you learn what certain important terms mean before you start the auto financing process. So, make sure to check what terms like interest, APR, loan term, principal, and down payment mean. That way, you’ll actually be able to determine which loan offer is the best for you.
Know Your Credit Score
Your credit score, as well as your credit report, tell lenders how financially steady and creditworthy you are. A higher score means there’s a good chance you’ll pay back your loan without defaulting on payments, which means you’re more likely to be offered a low rate. Keep in mind that your chances of getting approved for an auto loan don’t depend on your credit score alone. However, the higher your score is, the more affordable your loan is likely to be. If your score is unexpectedly low, make sure to take a look at your credit report and dispute any possible inaccuracies that you may find.
Find a Reasonable Financing Deal
Make sure to compare rates and terms before you zero in on any loan. Remember that lenders use varied measures and factors to determine how much you can borrow and at what rate, so it can help to have a few offers on hand. Never make the mistake of picking the first loan you come across.
Check out Financing Offers at The Dealership
Loans are not just offered by banks and credit unions. Your local dealership may also offer financing options, so make sure to check. Many dealerships even offer 0% financing because they want your business.
Finalize the Deal
Once you’ve managed to find the right loan and are sure you can afford the monthly payments, it’s a good idea to review all the paperwork carefully. Don’t be afraid to walk out of the deal if something doesn’t seem as it should.