Finding the best car loan is the easiest way to get the car that you have always wanted. Instead of wondering how someone can drive a nicer car than you on the same salary, take advantage of these 5 secrets to getting the best loan rates so you can get the most affordable car payment for the car you really want.
Check Your Credit Score Before Going To Purchase A Car
Your credit report will have the largest impact on the cost of your car loan. People with some marks against them on their credit report may have to pay higher down payment’s or more interest on their loans. Even with a stellar credit report, finding a great rate on a loan can be difficult, so making your report look as good as possible is essential.
Visit www.annualcreditreport.com and request a free copy of your credit report from each of the three reporting agencies. Federal law states that you have the right to make this request once per year for free or at any time that you are denied credit.
Print your reports and go over everything very carefully. Make sure that the information about your accounts, payment history, and balances are correct. Verify that your personal information is correct. Look for any accounts that may not be yours. If you find any problems with your credit report, use the same site to dispute these problems. It can take about 30 days for these items to be removed from your credit report.
Credit reporting agencies monitor everything about your credit and give you a ranking for creditors to use. The number falls between 300 and 850, with numbers in the 700 range considered good credit. You want to get your credit report number as high as possible so that you can secure the best rates.
You can also check your FICO score, another tool used by creditors, by visiting www.MyFico.com. This site will give you information about your average FICO score. Remember, you do not have to pay for this information and avoid any ads encouraging payment to access this information.
Once you have this information, you should check the other four steps before applying for a loan.
Shop Around For A Car Loan – Especially If You Are Buying Used
Getting prequalified for a loan will give you several advantages – especially if you purchase a used car. When you are prequalified for a loan, you will know exactly how much you can spend on a vehicle and how much your interest rate will be on the loan.
Another advantage of being prequalified is that you can decline any loans offered to you by the car lot if they do not have terms that you like. You have the ability to decline these higher rate loans. This is especially true if you are purchasing a used vehicle. Car lots are famous for up-charging the loans on a used vehicle because they feel that they provide a service since used vehicle loans do not come directly from the dealer.
Only Try To Prequalify for Good Loans
Whenever you apply for a car loan, whether you use the loan or not, a mark goes against your credit report. This mark is removed after a few months when there is no activity on that loan, but in the meantime, too many marks could cause you to pay higher interest rates.
When you shop around for a car loan, learn as much information as possible about the car loan before making a formal application. Avoid services that “Blast” your info out to get you the best loan; they could send your information to 10 or more places, causing significant marks against your credit.
Look At The Loan Terms
You should avoid looking at the monthly payment first and only look at the terms of the loan. Lenders try to coax you to accept loans with lower monthly payments, but they stretch the payments out much longer than you may expect. When you are paying on a loan for one or two years longer than you expected, you are also paying interest for an extra year or two.
Always Consider Alternatives
If you are having trouble securing a conventional car loan, you may want to try the banks or a credit union in person. You may also need to have a larger down payment to make the seller feel more secure about the purchase.
Other options may not be as attractive. You can seek out a loan from friends or family or use a buy here-pay here lot to get you in a vehicle right away if nothing else is working.
One Last Thing to Consider
Once you have your financing secured, make sure that you know everything about your used vehicle before purchasing. Use a VINsmart report to see your car’s life history and know for sure that it is a good car to buy.