Auto Loan: Expert Tips
Securing a great auto loan rate and favorable terms is as important to getting a good deal as negotiating the right car price. To make it easier, we’ve put together some expert tips on how to get the best auto loan.
Improve Your Credit Score
Before you start the process of researching applying for auto loans, it is helpful to learn about your personal financial picture. That’s why the first step to applying for a new car loan should be checking your credit score, which helps determine if you will be able to secure funding for the vehicle. Plus, a good credit score could help you get the best possible APR and save you thousands of dollars in terms of interest payments over the course of your loan. If you are able to improve your credit score before applying for an auto loan, you could save a lot of money.
Do Your Research
Researching auto loans can go a long way in helping you get the best car loan for your situation. Online tools, like a car finance calculator, can help your shop around and weigh your options. You can also check out reviews of auto loan companies to find out which lenders offer the most affordable rates. Consider these other factors when shopping around: interest rates, repayment terms, required money down, and any possible penalties that come with the loan.
Limit Your Loan Applications
If you’re considering taking out a loan, keep in mind that submitting multiple applications over a relatively short period of time, like, say, two months, can have a negative impact on your credit score. Some lenders offer prequalification tools that provide an estimate of the likelihood of getting approved with favorable terms without impacting your credit score. So, whenever possible, try to apply for prequalification and not preapproval (since the latter can lower your credit score).
Go Through the Fine Print
Once you’ve shopped for a loan and found the best deal, ask yourself: What exactly am I agreeing to? Go through the fine print with a notepad and jot down all the important details. Check out the mandatory binding arbitration and prepayment penalties while you’re reading the terms and conditions. Don’t be afraid or hesitant to reach out to your lender if you need more clarification.