Want to know the secret to a great deal on auto loans? Whether you’re buying a new or a used car, it is all about knowing what to expect and asking for what you want. There are various financing options that you can use while purchasing a vehicle, but one of the most important and widely used methods is taking out a car loan. Here are some simple tips and tricks to help you get the best car loan:
Check Your Credit Score
Getting a car loan can be tricky, but a high credit score can help you get a great deal. A high credit score ensures the bank that you’re less likely to default on the loan.
If Your Credit Score Is Low, Try to Increase It
You don’t need to be a financial expert to repair a low credit score and qualify for better loan or mortgage rates. Before applying for any loan — even if you’re not planning to do so immediately — try to fix your credit report.
Set a Budget
Before entering a dealership, consider your needs and wants. This will help you draw up a realistic budget based on what you can afford and will stop you from going past what you can afford.
Look Past the Monthly Payments
While lower monthly payments have their charm, it also means stretching out your loan for more extended periods. This can add to the overall cost because of the added interest. You could even end up underwater on your car loan, which is when the loan balance is more than the car’s resale value.
Make a Significant Down Payment
This helps shorten your loan duration and reduces your interest payments, thus costing you less money overall.
Consider Buying a Used Car
When looking for the perfect car, don’t overlook buying a used car. Older models offer attractive interest rates and an excellent variety to choose from.
Get a Pre-Approved Loan from Your Bank
Before visiting the dealership, make sure you get a pre-approved loan from your bank or credit union. This can be used as leverage to get a better deal from the dealership and give you a strong negotiation starting point.