If you’re thinking about buying a car, you’re probably thinking about getting a car loan as well. Here are six key auto loan tips that will help you find a financing solution that is a good fit for your needs.
Stay Informed
When it comes to qualifying for lower interest rates, your credit score is crucial. That is why it is critical to understand exactly what it is before applying for a loan. Your credit score can be checked for free online. You may also want to consider getting a free credit report from one of the three major credit bureaus once every 12 months. That way, you can check your credit report to see if there are any errors that need to be corrected – doing this can boost your score.
Consider Shorter Terms
If your financial situation permits it, opting for a shorter loan term has some benefits. Not only will interest rates be lower as the term extends, but you’ll also save money by paying less for your car overall. If you can’t afford the mortgage loan payment on the vehicle you want with a shorter-term loan, you may want to hold off until you can set aside a bigger down payment.
Pay It Off
The greater your down payment on whichever car you want, the lower your interest rate would be. At the very least, you should aim to make a down payment of at least 20%. The general rule is that for every $1,000 you put down, your monthly payment will drop by $18.
Time It Right
When it comes to purchasing a vehicle, timing is everything. If you can, shop in the later months of the year, such as October, November, or December. Also, look later in the month and earlier in the week, as these are the times when salespeople are stretched thin and are more willing to negotiate and offer you reasonable prices.
Include Other Taxes and Fees in Your Budget
Taxes and fees are one of the aspects that are often ignored until the end of the car-buying process. If at all possible, account for these at the start of the process and pay them off in cash. It may seem to be a minor point, but it will save you hundreds of dollars over the life of your loan.
Consider Refinancing
Refinancing your current car loan will save you money in a variety of cases. Perhaps your credit has increased, or you just want to lower your monthly payments. Refinancing may be the best way to a lower interest rate, regardless of your circumstances.
