With auto prices skyrocketing, the majority of car buyers choose to get a car loan to finance their purchase. Similar to cars, auto loans also come in many sizes, offers, and with their own set of specifications.
Here are 4 steps to help you find your way to a car loan that fits your budget:
Shop Around for Options
Treat shopping for a car loan similar to how you shopped around for your car. You should never limit yourself to just one lender. Take your time, do your due diligence, and research and get offers and quotations from multiple lenders like banks, credit unions, and even your dealership! Get a head start on this big decision so you can finalize on your loan provider around the same time as finalizing on your preferred car.
Keep a Check on Your Credit Score
Your credit score is the most powerful determinant when it comes to the interest rate you end up paying on your loans. The higher your credit score, the lower the rate you’ll be offered by lenders.
Experts recommend you check your credit score at least a few months before applying for a loan. This will leave you with enough time to fix it if need be. How does one fix their credit score, you ask? Well, there is no shortcut, the best way to do that is by making all your payments on time.
Talk to Your Dealer
Once you secure a few loan offers from banks and other financial companies, you should have a word with your dealer to find out what kind of options they can give you. This will help you put everything on the table, compare your options, and potentially negotiate for a cheaper loan. Try to cut a special deal like bringing your financing down to zero percent or customizing your payment schedule to fit your needs.
The Shorter, the Better
Even though a longer loan period means smaller monthly premium payments, experts recommend keeping the loan term as short as possible, like less than five years or 60 months for new cars. Why? Because loans with shorter terms tend to have lower rates and lesser interest payments, reducing your overall costs by a lot.