Three Things To Remember When Shopping For An Auto Loan

Shopping for a car can be an exciting time as you consider the
many options of models, colors, and accessories. Seven out of 10
new cars are financed, however, so finding an auto loan will
most likely be an essential part of the process. If you prepare
yourself with the right information about auto loans, financing
the car won’t detract from your enjoyment of your new wheels.
When looking for a car loan, keep these things in mind:

Know your financial situation and credit report. Before you
even begin looking for cars, decide how much money you can
realistically spend on a car. It also can be a good idea to get
the loan first, so there are no problems when you have found
your desired car. Before going to the lender, it is important to
know what your credit report looks like. By obtaining a free
copy of your report, you can clear up mistakes and raise your
score so you can obtain a lower interest rate and improve your
chances of being approved.

Keep the big picture in mind. A small down payment now may not
be best in the long term. Because cars depreciate in value, it
can be easy to become upside down in your loan, which means you
owe more than the car is worth. Putting 20% down is a good
option to help avoid this. If you can’t scrape up enough cash,
then keep the term of the loan short. Becoming upside down is
also common when you roll old car debts into a new loan. When a
dealer offers to trade in your car no matter what you owe, be
aware that you will still be the one paying for it, but it will
be in your new loan. Remember to keep the value of the car in
mind when considering how long you will be paying for it.

Shop around. It may seem obvious, but don’t settle on the first
lender that gives you a quote. Car dealers, credit unions,
banks, and online lenders all provide auto loans, and it is
important to compare rates and offers of several lenders before
choosing one. Also ask the lender several questions about the
loan. Questions should include: What is the exact amount each
payment will be? How many total payments will there be? Is there
a prepayment penalty? Is credit insurance required? Is the deal
contingent upon a third party approval of financing? The last
question is particularly important if you are working with a
dealer for a loan. You don’t want to leave with the car, only to
find out two days later that you weren’t approved for the
interest rate quoted. Don’t leave until everything is a done

If you are prepared to ask the right questions, financing your
new car will be simpler, and you can enjoy the ride knowing you
have made sound financial decisions.

About The Author: Lauren Armstrong is an industry professional
and expert author at Shop for a
loan, compare rates, and get instant approval online with our
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