If you are shopping for a car, you may need a car loan. Applying for a car loan can sometimes be challenging than buying the car itself, with all the paperwork and research involved. However, getting a car loan is much easier and can be done more quickly with modern technology. In this article, I’ve listed eight steps that you should follow to ensure you get the best deal on your future car’s financing. Let’s walk together.
Check your credit
When planning for an auto car loan, the first step involves checking and assessing your credit score rate. Your credit score and income determine how much you can borrow and the interest rate percentage. Don’t apply for a car loan without checking your credit score first. If there is incorrect information or any errors, you can be turned down for a loan or approved at very high-interest rates.
Determine how much you want to borrow and how much you can afford
The second step involves determining how much to buy and the amounts you can afford. You should also determine the type of car you’re planning to buy when applying for a loan. Here are some of the questions you can brainstorm:
How much is the monthly payment?
How much can you put down?
What is the period of the loan?
Apply for a car loan from multiple lenders
It’s time to look for lenders after determining how much you want to borrow and how much you can afford. Compare quotes from different lenders to ensure that you get the best financing deal. Your credit union or bank can give you better terms, especially if you select an automatic loan payment from an account there. Individuals can also compare car loan lenders online.
Get preapproved for a loan
Once you’ve narrowed your lenders, it’s time to apply for pre-approval. A pre-approval is a financial institution’s method of conditionally saying they are willing to lend you. After getting pre-approvals, you will have 14 days to gather as much information from each lender. Here you can compare interest rate quotes to get the best auto financing deal.
Use your loan offer to set your budget
A pre-approval determines the maximum amount that you can borrow. However, that may not be the price of the vehicle you want to buy. Always allow an additional of 10% to caution for interests and fees. Here you can seek the help of a loan calculator to design your loan and determine the correct monthly payment that fits your budget.
Accept an offer
The next step after pre-approval and assessing your budget involves accepting your offer. Make sure you have the proper documentation to avoid being turned down. Some of the documents include proof of income, driver’s license, proof of residency, and insurance, depending on your lender.
Head to the dealership
This is the best part: pick out your vehicle. Then you will sign some documents at the dealership. Aftertime, your lender will send you a blank check, and you will have to sign it once you and your dealer have agreed on a price. After you’ve left the dealership, the lender will send you information on how much you owe and how you will pay.
Make your payments on time
After your vehicle loan is locked in, you are free to use your car. However, don’t forget to make on-time car loan repayments. Lenders like Autocarloans will provide you with online access to your loan information which helps you plan how you’ll repay. Paying your car loan on time helps you to build your credit score and also allows you to get a loan with better interest rates in the future.
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.