(MP) When considering auto loans, you want to be adequately covered to get the car you want, but you don’t want to pay more than you should. Unfortunately most people are doing just that, they don’t want to make time shopping around for the right financing.
Look friends, the smart way to buy a car is to: Choose the right car, get a good price, and get an affordable auto loan. But before you even buy the car, first think about looking for auto loans. If you do some research ahead of time, you’ll ramp up your chances of obtaining an car loan that fits you. Plus, when it’s time to make the deal, you’ll be good and ready — before the salesman can ask, “How will you finance the car.”
Strategies to help you find the best auto loans
Manage Your Credit
All US consumers are eligible to a free credit report under federal law, so exercise your rights. Be sure that your credit looks as good as it possibly can — it definitely affect the interest rate you get, and your monthly payments. Verify if there’s anything on your reports that needs fixing. Any errors or negative information can keep you from acquiring the car you want.
Know How Much You’re Spending
Get a clear idea of just how much you can spend (down payment and monthly payments) before looking at cars. If you fall in love with a car before you know whether it’s in your budget, some salespeople could make it seem as if the car is affordable with fancy math and long-term loans. Realistically, you’ll end up with a loan that costs too much and that you’ll be stuck with for years.
Although, car dealers have access to car insurance, by doing some comparison shopping, you could easily save hundreds of dollars a year. So, shop around, make calls or research online. When making calls and shopping online, make sure you explore all your options on discounts. Insurers give discounts for such things as a good driving record, your car’s safety or security equipment and certain occupations or professional affiliations. Many companies now offer lower rates if you enroll in “pay as you drive” plans. Some will even give big discounts for young drivers in the family who have high grade-point averages. Consider contacting an independent insurance agent for more information you may need.
If you qualify for an car loan, you’ll get a “pre-approval” letter that’s good for a time and up to a certain amount of money. It’s almost like having a blank check to buy your car. Whatever bank or local credit union you use will give you the pre-approval. And, you don’t have to limit yourself to the lending company where you do your banking either. Check out a few different sources before you commit to buying your car. You should see what kind of car loan, and for what amount, they can offer. Whichever one offers you the best deal, that’s the one you can get financing through and your pre-approval letter.
Since you’re now pre-approved, you can get focused on shopping for your car. But, even with the large amount of auto loans online available, many people still buy new cars within only a few days of making the decision. This leaves an enormous opportunity for a buyer to be sold a car, that he or she may not have wanted, and not making an informed decision to buy a car. This may sound simple but it is often overlooked. Don’t be in a hurry, shop around before you buy. You must always be in control throughout the entire process, and you should have made many selections way before you even step into a dealership.
Another important point here is that you don’t have to get your car loan from the dealership. And with your pre-approval letter most dealers will try to beat the terms you’ve been offered for your loan. If the terms work to your favor – take it. Just be careful: the dealer may try to talk you into longer term financing that will cut your monthly payment, but will cost you more in the long-term.
Finalize the Paperwork
Once you’ve chosen the car and negotiated the price, the auto dealer’s financing department will coordinate with the lending company to complete the sale. They will very likely try to get you to purchase add-ons, such as an extended warranty, VIN etching, paint or fabric protection etc. Make sure to research these in advance so you don’t feel pressured into making an uninformed decision.
Auto loans for poor credit
Credit problems can happen to anyone. Whether your credit problems have developed over time due to poor spending habits or come on suddenly due to a job loss, accident or illness you can still get an auto loan. While the average interest rate for borrowers with good credit is between 4% and 5%, poor credit borrowers will pay an average of 10% to 13%, depending on their credit score. Some lenders can go higher than that, according to Phil Reed, senior consumer advice editor for Edmunds.com. “You don’t want to have the attitude of ‘just get me a loan.’ There are still deals to be made,” according to Bankrate.com So, checkout your credit report and scores at credit.com to get an idea of exact auto loan rates available before you buy.
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