If you’re looking for a new car, you’re probably wondering how to secure a good auto loan. Finding the right auto loan can be tricky and frustrating. Luckily, we’ve compiled a few tips to help make the process easier.
Understand your credit history. With home loans, lenders tend to be more strict about offers regarding your credit score. But when you apply for an auto loan, you may have more flexibility with what you can get approved for with your credit score. You can get free copies of your credit score reports through various platforms. This is important to do because you need to know what kind of loans you should consider looking into. Also, you should understand your credit score in general because it can impact other financial situations in your life. In fact, According to a Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York, 88% of borrowers with credit scores of 780 or higher had credit cards in 2016. Credit card and loan approval can be significantly influenced by your credit score.
Choose a lender separately from the car dealer. While many people choose to get their auto loan through the car dealership, it can actually be more beneficial to look into credit union auto financing. Credit union rates tend to be much lower and they can offer better loan terms. It’s important to get prequalified for a loan before talking to the dealership about their financing offers. This way, you can look at the contract with the dealer and see if they are able to beat the credit union auto financing deal you already got approved for.
Keep in mind the loan’s total cost. Auto loan rates can change every day, depending on where you’re looking. Of course, it’s important to look for the lowest interest rates possible. Additionally, you need to consider the length of the loan term. While a longer term means smaller monthly payments, you also don’t want to be stuck paying off a loan for too long. And lastly, consider how much you can afford to put down on the loan. While it may seem scary to put a large sum down, this can help you in the long run. All of these individual factors add up to contribute to the overall cost of the loan. Because of this, it’s important to think about what everything is going to add up to be in the end.
Hopefully, you feel better about applying for auto loans now. Just remember, credit union auto financing can offer you lower rates and work with you to make sure you get the right loan for your financial situation.