Getting an auto loan can be overwhelming, especially for first-time buyers. It’s important to go through each stage patiently and carefully to get the best deal and vehicle for you. Here are six handy tips to keep in mind when you’re shopping around for a car loan that works for you.
Review a Copy of Your Credit Report:
A high credit score (661 or higher) boosts your chances of qualifying for low-interest rates. Get a copy of your credit report (many credit bureaus offer a free copy every twelve months) and review it to check that there aren’t any mistakes. It’s important to know exactly what your credit score is before you apply for your loan. If you have a low credit score (600), consider working on improving your credit health and shop around for loans.
Look out For Loans with Short Terms:
With a shorter loan term, you’ll enjoy lower interest rates, and higher savings and will be able to pay off the loan amount sooner.
Pay a Larger Down Payment:
Remember that for every $1000 you put toward the down payment, your monthly payment goes down about $18. This is why bigger down payments (aim for at least 20 percent) are a smart financial move when it comes to car loans. Besides, the bigger the down payment, the lower your interest rate and anything you do to drive that interest rate down will pay off for you in the long run.
Consider the Right Time to Buy a Car:
It might make sense to wait until the end of the year to buy yourself that dream car. Salespeople and dealerships that are itching to meet their quotas are more likely to be open to negotiating down to your dream price point. Even better? Try to time your purchase to the end of the month and the early part of the week.
Try Paying Taxes and Extra Fees in Cash:
There’s nothing worse than discovering hidden costs at the end of the car purchasing process. Don’t overlook taxes and fees in the early stages of buying a car. Pay the fees in cash and you might save on your payments throughout your loan.
Refinance Your Loan:
If your credit improves during your loan term or you’re looking for a way to bring down your monthly payments, consider refinancing your existing car loan.
