If you’re buying a car, it’s likely that you’re also thinking of getting an auto loan. And as you’ve probably discovered, there are a lot of options out there, and it can be confusing to understand what’s best for you. To help you find a loan that’s a good fit for your needs, here are four helpful tips.
Know Your Credit Score
When it comes to getting the best deal on an auto loan, one of the most important factors is your credit score. The higher your score, the better the terms and interest rate on your loan are likely to be. A credit check is almost always done by lenders before they’ll approve you for an auto loan, so it’s important to know what your score is before you apply. While finding out what your credit score is will give you an idea of how much you may have to pay for your loan, don’t let it dissuade you if it isn’t stellar. Auto lenders may be willing to offer reasonable terms if you put down more money or have a guarantor.
Get Preapproved for Financing Before Heading to The Dealership
By getting preapproved for financing from a bank or credit union, you’ll be able to shop around for the best available interest rate on an auto loan and get a discount from some dealers when it’s time to buy your car.
Work out All the Fees
Most people only think about the rate of interest when calculating the cost of their loan. But make sure to not forget about the other fees associated with getting an auto loan. Dealer documentation fees (or doc fees) are usually between $100 and $300, although they can be much higher in some states. If you don’t want to pay these fees, tell the dealer that you won’t agree to a purchase unless they waive them. Be prepared to walk away if they refuse — there are plenty of other cars out there!
Don’t Limit Yourself to A Single Lender
There are numerous banks and credit unions out there, so don’t hesitate to research various loan options. Make sure to only sign for a loan after you’ve compared rates and fees charged by other lenders in the area.
