Buying a car is a big deal. It’s even more important, though, that you get a great deal when you finance it. Start by checking your credit report and correct any issues that may be in it. Once your credit report is in good shape, start with the following steps.
Check out multiple lenders, both online and in person. Ask your bank and credit union, and online lenders for quotes and compare their rates. You can even let them know that you’re shopping around to have them work harder for your business. Compare all the factors like the loan term, down payment, interest rate, etc.
Choosing a Lender
There are different types of lenders, each with their own pros and cons. Large national lenders have resources to offer you good deals and incentives, but they have millions of customers. Local community lenders, like local banks or credit unions, may offer you better terms if you have a good relationship with them. Online lenders that specialize in auto loans may offer good deals but check with BBB and online reviews because there are a lot of scammers. Dealership financing is the most common car financing, and it’s easy and fast. But you’re unlikely to get the best deal.
The best thing to do is get preapproved for a car loan from a lender that offers you good terms. They’ll need to know which car you’re buying, your salary, address, and other personal details. Apply to all lenders for preapproval in the same two weeks, so minimize the impact on your credit score. Preapproval also puts you in a better position to negotiate later. You can bargain down the price of the car at the dealership.
It’s rather simple. The larger your down payment is, the smaller is the amount you’ll borrow. That means you’ll pay less interest and save a lot of money over time. You’ll also get better loan terms.
Ensure that you don’t spend more than 10% of your gross salary on car payments every month.
Check model reviews, safety ratings, features, and other details on third-party websites. They can also help with the real price to expect while negotiating.