Getting a Car Loan? – 10 Things You Need to Know
Once the decision is made to buy either a used car or a new car, the question of how to finance a car comes into play. A car loan is one of the major purchases any person will make. For this reason, think carefully about the following ten car credit tips:
1. What Will Your Budget Handle?
Step one before any major purchase is to examine your budget to see what kind of monthly car payment you can handle. This requires calculations that include the interest rate you will need to pay. You may need to recalculate this as you go along if your finances change so consider a high/low range.
2. What Is Your Credit Rating?
Once a year you are allowed to get a free credit report from all three of the major credit reporting agencies. These agencies are Equifax, Experian, and TransUnion. If you spot any errors, be sure to clear these up as soon as you can. A good credit report is important when you finance a car. You can be sure the loan officer will require it.
3. Research Loan Rates
In calculating your potential payment, you will need to know what rate you can expect to pay. Rates vary and depend on where you live, but www.bankrate.com lists the average rate for car finance. If you are looking at a 36-month used car loan, the average rate is 4.62%. A 36-month new car loan averages 4.10%. These are only averages and you may be able to find a better car finance loan at your local bank, community credit union, or online.
4. Consider An Online Source
Sometimes you can find what you need on a web site. Explore the options you find on the internet as well as locally. The lower overhead experienced by the online world may yield a lower interest rate on the car loan.
5. Banks and Credit Unions Are Competitive
If you decide to place your loan locally, it will be important to visit with loan officers at more than one place. With a good credit report, you may be able to negotiate a lower rate. Even if that is not the case, these visits will help you choose the right place for your car loan.
6. Line Up Your Credit Before You Look
Nothing aids your negotiations like having the car credit arranged before hand. This can be done either online or at your local bank or credit union. This will also help you cement your top price.
7. Find Your Car
Researching prices for used and new cars will be important when you settle on one certain car. Dealers are in a highly competitive business and they know it. The prices you find online or by walking around a dealer’s lot will only be a negotiating point, but it will help you see if your research is realistic.
8. Negotiate the Price
By now you already know the price range you are equipped to handle. The dealer doesn’t know what this price is, but an experienced salesman will be able to tell in a very short time where he may be able to land you. Start lower than your ideal price and lower than the tag price on any vehicle.
9. Avoid the Attempt to Finance a Car at the Dealership
Most dealers have their own finance officers and would like to sell you on dealing with them to finance a car. This is where you are ahead of the game by arranging you’re financing before you go looking. It is understandable that a dealer would like to see you use their car finance offer. They make money setting up car credit.
10. Be Aware of Rebates
When you are dealing on a car, be sure you understand any rebate offers. Sometimes a rebate is offered, but the price you are able to negotiate with the salesman will not include the rebate. That rebate should be yours so be sure it is.
A final tip seems to be in order here. Work to pay down this loan as quickly as your budget will allow. You can save dollars easily by making an extra payment as often as you can afford to do it.