Anyone who’s in the market for a car loan is looking for the same thing – the lowest interest rate they can get, and the shortest payment period. These things depend almost entirely on your credit history, which shows the lender how much risk she’s taking by letting you borrow such a large sum of money.
How to Find and Get a Car Loan
As you begin your search for a lender, it should start by perusing current auto loan rates online. Your computer is right in front of you, after all, and it can take you to any location almost immediately. Take a look at several potential lenders online and check out consumer information regarding loans on government websites to fully understand the terms before diving in.
Use an Auto Loan Rate Calculator
This has many obvious benefits. First of all, it lets you know where you stand and bolsters your bargaining position for the day when you’re in front of the auto lender. Having an auto loan tailored for you via computer will simply put you in a better position.
Another benefit of checking auto loan rates online is to familiarize yourself with what to expect with an in-house loan application process. Ask anyone who’s been through it, and they’ll tell you that forewarning and preparation were invaluable.
With an auto loan rate calculator, you’ll be armed with enough information to compare and contrast dealer loan offers as they’re presented; and feel confident that you can’t be snookered into a bad deal.
Check Your Loan Acquisition Status with Several Lenders
The reasoning behind this is simple: you want as much information as is reasonable to get a solid idea of the range of interest rates for which you’re eligible, for a given credit score/history. Make sure that every lender you approach only conducts “soft pulls” to find out information on your credit history. Why? Because these soft pulls will not affect your history in the way hard pulls might.
Another protective mechanism against the hard pull is to have all your loan applications completed within half-a-month. It is usually only many credit checks over a period of time spread out over more than two weeks that have the potential to negatively affect your credit.
Always See What Your Present Credit Relationships Offer
This simply means to approach your current bank or credit card companies first regarding auto loans and financing. Why not, after all? They already have your credit history, and understand your financial situation better than anyone else – insofar as your credit history currently reflects that. Furthermore, you can use their figures if you happen to go the online lending route in the end.
Compile Every Document You’ll Need
This includes driver’s license, pay stubs, employment history for your last two jobs (including your present one), your current and former address, bank account numbers and most recent car loan if this isn’t your first.
Make sure to consult the lender’s requirements to double-check that you have every document they’ll need; most loans are rejected because the applicant arrives unprepared.
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Always have the goal in mind that you need to pay off the loan as soon as you can. This means that you should take a higher monthly payment if you can pay it comfortably.
The bottom line is that a shorter term generally includes lower interest rates, so you’re not paying as much to borrow the money. Of course, this isn’t easy to get if you have bad credit; but you can improve your credit score as the months pass by and refinance for a better rate down the line. 🙂
