How to Get a Car Loan Easily

By on October 8, 2020 0 839 Views

Most people purchase their cars on loan, but not everyone does their due research when selecting their loan, which then makes the loan quite expensive. To get the best rate on the loan, it’s important that you shop around and compare the loans offered by different lenders. Here, we give you a step-by-step breakdown of how you should go about the loan process. 

Check Your Credit Score

Your credit score will determine how much interest you will be charged. It’s best that you don’t apply for a loan before checking your credit score since there’s a chance your loan application may be rejected or you may be offered a very high rate if you have a poor credit score. If your credit score is towards the lower end, it may be wise to wait until it has improved slightly before you apply for a loan. 

Shop Around

Next, you’ll need to research different auto loans. So, look at the loans offered by large commercial banks, local credit unions, online lenders, and dealerships. Shortlist at least 3 loans that have a competitive rate.

Apply for Pre-Approval

Once you narrowed down a few lenders, you’ll need to apply for pre-approval. Pre-approval gives you the specific interest rate that you will be charged, thus helping you pick a loan that has the lowest cost. 

Find Your Car

Now that you have a few loan offers in hand, you can start looking for cars. Keep in mind that your budget will have to be under your approved loan limit. 

Check the Dealer’s Loan Offer

If you are buying your car from a dealership, it’s likely the dealer will provide you an offer as well. Don’t just say no to this. In fact, you should, ideally, use the loan offers you have as leverage to negotiate a lower rate with your dealer.

Finalize a Loan

If the dealership offers you a better rate than what you currently have, go for it! Else, go ahead with one of the loan offers you have in hand. Make sure to look out for things like hidden fees and prepayment penalties.

Make Your Monthly Payments on Time

Once you get your loan and buy your car, it’s important to make your payments on time. Keep in mind that any delays or defaults could affect your credit score.