Take control of your financial destiny
- MASTER your money. Free MoneyRight personal finance tool
- PROTECT your credit. Credit Monitoring and Repair
- CONQUER the loan process. New Loan Coach tools and Calculators
- CONTROL your offers. Make banks compete
How to Get a Great Auto Loan |  |
Auto dealerships are offering terrific deals on used as well as new vehicles right now. The auto industry has taken such a hard financial hit, dealers will do practically anything they can to make a sale.
Yet as badly as dealerships want to make a sale, many would-be buyers are having a tough time qualifying for car loans. There are several things you can do to take advantage of today's car deals by obtaining the financing you need to make a purchase.
The first thing to do if you're planning on borrowing to finance a car is review your credit report. Your credit report isn't just about having a good enough score to qualify for a loan. You can help ensure you get the best loan terms you possibly can by getting your credit report in the best shape possible.
Obtain a copy of your credit report well in advance of when you plan to apply for an auto loan. Look for any inaccurate information or dated, negative information that could be removed. You can find out how to repair your credit yourself by doing some research online. If you have a lot of outdated negative information or inaccurate items on your report, you may wish to hire a credit repair service to manage cleaning up your report for you.
Credit report clean up can take several months, so it's important to start the process as soon as possible. In the mean time, if there are any old debts on your report you neglected to pay, pay them off as soon as possible. It's also helpful to pay down as much credit card or other consumer debt you have before you apply for a loan.
While you're working on credit history clean up and repair, start saving up a down payment for your car. The bigger your down payment, the more favorable your auto loan terms will be.
Consumers should have three goals in mind when taking out an auto loan. First, they should aim to borrow as little as possible. Auto dealers may tempt a consumer with a sizable down payment and good credit score to borrow more and purchase a higher-end vehicle. Plan ahead of time how much you will spend and don't exceed your budget.
Taking out the shortest term loan as possible is another goal consumers should have in mind. The faster you pay off an auto loan, the less interest you will pay. You're also likely to enjoy more years of payment-free vehicle ownership with a shorter-term loan.
Obtaining the lowest interest rate as possible on an auto loan is another goal to have in mind. Once your credit history is in the best shape possible and you've saved up as much of a down payment as you can, it's simply a matter of shopping around for the best interest rate.
Auto dealerships offer convenient financing options for consumers, but they don't usually offer the lowest interest rates. A bank or credit union usually offers a lower interest rate than dealerships. Online lenders that specialize in auto loans may provide the best possible interest rates of all. Don't overlook this important potential source of a great auto loan deal.
Once you believe you've found the ideal financing option for a new car, take the time to read the terms carefully. Evaluate fees associated with the loan, possible pre-payment penalties and other fine print details that could make your auto loan more costly than it looks.
It takes time and effort to fix up your credit history and shop around for the best auto loan you can obtain. Yet this is the best way to guarantee you get a great deal on your financing as well as on your new car.