The English language can often be deceptive but not when it coined the term “car loan”. A car loan is just that: a loan given to somebody who wants to buy a car. In this case, we’re guessing it’s you. Here are a few steps you can take to make sure the process is a smooth one.
Lenders respect people who speak their language
A car loan is a financial transaction that involves specific terms. Knowing them will help you communicate better with your lender and also help to keep you on a more equal footing. Do some research – the internet has plenty of articles that explain common terms and names that will help you to deal with your dealer better.
Your credit score can score you low interest rates. OR NOT?!
You probably have several scores to your name already because different credit reporting companies have different ways of determining scores. The higher your score, the lower your interest rate. If you’re clueless about this sort of thing, it will help to sit with a trusted financial advisor and determine how to achieve the best deal with regard to your individual scores. It’s always a good idea to correct any problems with your credit before taking the steps to apply for a loan.
A lot of dealers are looking to make great deals.
Now this is great news for you because it means they all compete with each other to offer good competitive rates and generous promotional offers. Factors taken into account include market demand, creditworthiness and the loan-to-value ratio. If you do enough research, keeping these things in mind, you’re definitely going to find a deal that will work for you.
It’s not about whether they approve
It’s about whether you approve.
Car buyers today have access to options and information like never before it. So use it. You can look at loan options from carmakers, large banks, small banks, credit unions, private companies and more. All of them carry different sets of advantages. Give them all the onceover. And then some. Don’t compromise when it comes to finding a lender that makes you comfortable.
Not every loan is created is created equal
When it comes to choosing a loan, don’t just consider offers that have low monthly payments. Think of the bigger picture: the total cost of the vehicle, including the interest you’ll be paying. Sometimes, a higher monthly payment and smaller time period actually costs you less than low payments over long periods of time. Short-term loans tend to offer more relief in the long-run.
Down payments are your friend
You might grumble a little but the truth is, a down payment is likely to get you a better deal. You’ll have less negative equity on the loan which means your car insurance payment will probably cover you if something happens to the car. It’s also a good idea to buy add-ons up front: this allows you to see the real cost of the items and compare them with similar offerings on the market.
Why send in one application when you can send in more?
It will take time but it’s a good idea to apply for a loan from several different lenders. You can submit multiple applications without damaging your credit score if you do it in a short period of time. (Spacing them out will negatively affect your score.)
If you follow these steps, it’s unlikely your request for a car loan will be denied.
Here’s what to do in case the unlikely does happen.
Loan rejections happen for many reasons. Your lender is obliged by law to tell you why you are not eligible for a loan. Instead of seeking out a lender with lower standards, reassess their assessment of you and see what you can fix to make a deal that, no matter what, will keep you out of debt.