Getting the best loan offer requires some homework. Here is a helpful guide that will enable you to get a great deal on your next auto loan.
Credit Report
Your credit score and income play a huge role in deciding how much you can borrow and its interest rate. Always check your report and correct any mistakes in it before checking for loans. If your score is poor, try improving it before applying for a loan.
Apply with Multiple Lenders
Once your credit is in order, check for auto loans with large national banks, credit unions, local community banks, and online lenders. Compare the quotes they offer. Check their terms and conditions too.
Get Preapproved
Once you’ve shortlisted good lenders, get them to compete with each other to offer you the best rate. Choose the best offers and apply for preapproval in the same two-week window. This will impact your credit score, so only do it if you’re really ready to buy a car. Getting preapproved will help you negotiate a better price for the car.
Set Your Budget
Your preapproved amount is the most you can borrow but not the price of the car. You’ll need to keep 10% aside to cover taxes and fees. Use a loan calculator, put in your down payment, trade-in value for the current car, lender terms, and find the monthly payment that fits your budget. Don’t let it exceed 10% of your take-home pay.
Find a Car
Carefully check the loan terms and conditions and find a vehicle as per the lender’s stipulations. Ensure you meet all requirements for brands, dealership, money transfer, and time restrictions.
Review Dealer’s Offer
You can also hear out the dealer’s offer. Tell them that you have a preapproved offer and see if they can beat it. If they can’t you’re still a cash buyer who can negotiate on the final price of the car.
Finalize the Loan
Ensure there are no hidden fees, longer-term, unexpected add-ons, or an early payoff penalty, or any other sneaky stuff and finalize the loan.
May Timely Payments
Enjoy your new car and ensure that you make all your loan payments on time to avoid penalties.
