Buying a new car is something most people look forward to. There are a number of things that you have to do in order to make the car buying process easier and more successful. The main thing you have to figure out before buying a vehicle is what type of auto loan you need. Choosing the right auto loans will require you to do your homework and avoid rushing through this process. By failing to research the various lenders in your area, you will be putting yourself at risk for signing off on a less than stellar loan. While this research may be a bit time-consuming, it is more than worth the effort that you have to invest. Here are some of the things you need to consider when trying to get a great deal on a new car loan.
1. Shop For the Loan and the Car Separately
One of the biggest misconceptions that most people have when it comes to car loans is that getting a loan at a dealership is their best option. While this may be true in some cases, there are times when you will actually pay more for a car when getting it financed through a dealership. Instead of falling victim to overpaying for a vehicle, you need to shop for your loan and car at two different places. Going into local banks and credit unions to see what type of loans they can offer is a great idea. Generally, these places will be able to offer you a low interest rate on the loan you need to buy a new vehicle. Once you are pre-approved for a car loan, you can head to the dealership to find out what they have that is in your price range.
2. Your Loan Shopping Process Should Last No Longer Than Two Weeks
Most people fail to realize that the more credit they apply for, the harder it will actually hit their credit score. If you are applying for various car loans over the span of a few months, then chances are you will see your credit score steadily decline. The best way to avoid these problems is by limiting your search for the right loan to a two week period. By doing this, you will be able to avoid hits to your credit because all of the inquiries will count as one. Shopping smartly for a car loan is essential when trying to save money and reduce the damage to your credit history.
3. Getting to Know Your Credit History
Before heading out to find the right lender, you should take some time to look over your credit score. There are tons of websites out there that will allow you to look at your credit score for free. Getting to know what your score is can prepare you for the types of loans you are going to be offered. If your credit score is a bit low, you may want to work on increasing it before going out to get a car loan. The lower your credit score is, the more money you will ultimately have to pay for your loan.
4. Consider the Whole Loan Amount Not Just the Monthly Payment
Among the biggest mistakes you can make when shopping for a car loan is only thinking about the monthly payment. While you want a lower monthly payment, you don’t want a loan that is going to drag out for years. Getting a car paid off in a faster amount of time can save you a lot of money over the years. While getting a shorter loan term may cost a bit more on a monthly basis, you will benefit from it in the long run.
Finding out as much as you can about the lenders in your area is the only way to figure out which one is the right fit for your auto loan needs.