If you have a regular income and reasonable credit, obtaining an auto loan should be relatively easy. However, just because something is easy doesn't mean that it's always right. Auto loans are not created equal, and if you don't do your research you may end up paying more in interest rates than the car is actually worth. If you're in the market for a new or used vehicle, use these tips to secure the best auto loan your credit will allow you.
Know Where to Shop
Many people make the mistake of relying on dealerships to find them the financing they need. Be smarter than most, and shop around before heading to the car lot. Talk to your bank about obtaining a loan through them, visit your local credit union or even look into online lenders. These institutions typically offer lower interest rates and better terms than dealerships, and can end up saving you thousands of dollars in the long run.
Get Preapproved
Preapproval is beneficial for a number of reasons. For one, it grants you peace of mind, as even if the preapproval doesn't offer the best rates, at least you know you have enough to cover your purchase. For two, a certificate of preapproval offers protection. You know about how much you can expect to be financed for and what types of rates to expect. If a dealership comes back to you with a financing offer that is way lower than the preapproval and with double the rates, walk away, as they're just trying to pull one over on you.
Get Multiple Offers
If you're desperate for a new vehicle it can be easy to accept the first auto loan that comes your way. However, doing so can be a huge mistake. If you only look at one or two offers, you can't really get a feel for what your worth. By shopping around and obtaining offers from multiple lending institutions, you can get an accurate idea of just how much you can afford and what types of rates are reasonable.
Shopping for auto loans takes time, but if you're patient and follow the steps above, you can obtain the fair financing you need.
