Buying a new or used car is exciting, but it can also be very expensive. If the car you’re looking for costs more than you have in cash on hand, financing with an auto loan is the solution to your problem. Getting a car loan for the first time can be an intimidating process, particularly if it is the first time you’ve acquired a loan to make a large purchase. If you’re in the market for a car and need to finance it, here’s everything you need to do to get the best possible loan for your car.
1) Check Your Credit Score
When it comes to borrowing money there are few factors as important as your credit score. As a general rule, the higher your credit score is the better offers you can get, meaning both the ability to acquire more financing and the option for lower interest rates on the money you borrow. If you have some time before you will be buying you should put effort into improving your score with credit-conscious actions like making payments on time and paying down your balances. The better rates you could earn will pay off big for you.
2) Set a Budget
For an easy car loan approval process it is best to make sure that you are shopping within your means. When you set a budget keep it within the range you can afford with some wiggle room to spare. This makes sure you don’t run into trouble over one or two months where money is tight.
3) Speak With Lenders
Once you know how much money you are looking to spend on your car it’s time to find the financing to cover that budget. It’s never been easier to shop around for car loans than today. Not only can you speak with several local lenders, but you can also shop through online marketplaces which put you in contact with many lenders with just a few mouse clicks. Getting a pre-approval before you hit the market is the best way to know exactly how much you can afford to spend.
4) Enter the Market
With your financing set, you’re ready to start shopping. Just as you should look around both online and in-person for financing, do the same for your car, as well. Check out what’s available near you then visit your favorite options first. Unless you worry that the car you saw is a hot ticket and won’t be there for long you should try a few cars to make sure you find the one you prefer best.
5) Negotiate a Price
Just because you are financed up to a certain level doesn’t mean you have to spend that entire amount. When you have found the car you want it is time to negotiate. There is almost always wiggle room on the dealership’s side, so see if you can get the price knocked down a bit. Remember that interest on your loan means every dollar you shave off can save you much more than a dollar when all is said and done.
6) Ask About Dealer Financing
The final step when you’ve agreed on a price is to see your financing options with the dealership. There is no guarantee it will beat what you already have on offer from your lender but there is no harm in trying and if you can save a bit on interest or get a more favorable payment structure you can save a lot over full terms of the loan.
Getting an auto-loan does not have to be a scary proposition. When you do the right things throughout the process you can be confident in finding the best option for you and enjoy your new car for the lowest possible cost.