If you want to buy a car there’s a good chance you’re going to need to secure one of the car loans offered at the dealership you visit.
This can be an easy process where you already know and understand what’s on your credit report, or it can be an extremely difficult one in which you’re surprised by the results. If you take some important steps before going to the dealership to apply for one of the car loans offered, you’ll be able to make the process simple and more enjoyable.
Understand Your Budget
Your monthly budget can only take a specific amount of car payment in order for you to continue to survive and thrive. It’s important that you take a look at your budget and figure out the maximum payment you can afford. Factor in maintenance costs, licensing fees, and fuel costs and you’ll be on your way to knowing what you can afford when you secure one of the car loans offered to you. If you don’t understand your budget and know what you can afford to pay for a vehicle, you may not be able to keep the car for very long.
Check Your Credit Score and Reports
This is something you should know ahead of time, but not all of us know what’s in our credit reports or what our score happens to be. You need to take a look at what is in your report and if the score is low, you’ll have to pay more in interest rates for any of the car loans offered to you. Review the credit report to see if there are any items that don’t belong to you as well. Take the necessary action to make sure your credit score and report are accurate and your score is as high as it can possibly be.
Shop Around for Car Loans
The car dealership isn’t the only place for you to find the car loans you need. You can check with your bank or credit union to see if they can offer you a car loan that will work better for you. There are some ways to have a pre-approval quote without having an inquiry attached to your credit score, which can help you when shopping for the right one of the car loans for you to have the payments you need.
Get a Preapproval
If you find the vehicle you want at a dealership that has a history of higher interest car loans, you’ll want to have a preapproved loan from your bank or other financial institution. Typically, you can find good interest rates with the bank where you have an account in good standing. If you don’t receive a preapproval, make sure you’re working with a dealership with a good reputation and the ability to help you secure the right one of the car loans offered. This is extremely important if you have bad credit so that you don’t get taken advantage of in the process.
Should You Get a Personal Loan Instead?
Most of the time, a personal loan isn’t the right choice when you’re shopping for car loans. A personal loan typically has a much higher interest rate than a car loan because the only item needed to secure a personal loan is your signature. With car loans, the vehicle is the collateral used to secure the loan and it’s easy enough for a lender to repossess a vehicle if you don’t make your payments on time. Because of this factor, you’ll find that car loans are more affordable for you.
Secure the Loan that’s Right for You
It might sound like a long and drawn-out process to secure one of the car loans that you can find at any number of financing institutions, but it’s not. You want to have the best deal possible to save money in the interest rate that you’ll pay when you secure a loan. Shop around, find the right deal for you and make sure the car loans you’re being offered make sense for your budget and your credit score. If you do these things, you’ll have an excellent shopping experience with the dealership you choose.
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