Need an auto loan? Most people don’t walk into dealerships with a handful of money to pay the total price of a car and depend on the money offered via an auto loan to help them drive quality vehicles. If you are amongst those people, do things right when it’s time to apply for an auto loan. Before completing any application for an auto loan, it benefits you greatly to improve your credit score and to learn a few specific tactics that ease the entire loan application process.
Learn more about auto loans below and put this information to work when it’s time to buy a car. Whether you’re in the market to buy a new or a pre-owned car, the information below benefits your purchase as it helps save you money. Do not shop for a car without this information in mind and in use.
Getting the best rate on an auto loan is an important aspect of buying a car, whether you’re shopping for a new or pre-owned model. Although most dealerships offer on-site financing, they may not always offer the best interest rates and terms. Shopping around reveals the answer, helping find the best auto loan provider for your specific needs. The best place to get an auto loan is different for each person. Factors such as your age, credit history, and the amount of money you need to affect the lender most suited for your needs.
The internet is an invaluable source for auto lender research. Sources such as credit unions, banks, and other financial institutions offer auto loans in addition to the dealership. Each lender offers its own advantages and disadvantages, of which you should learn as you compile your research. Use legitimate sources of information as you browse the internet for information to ensure accuracy in detail.
Improve Your Credit Score
The better your credit score, the easier it is to get an auto loan at the maximum value. Further, people with the best credit scores receive the lowest interest rates, saving them money on the cost of their vehicle. Check your credit score with the three major credit reporting bureaus ahead of applying for an auto loan. The three major reporting uraeus offer a free copy of your report each year available from annualcreditreport.com. Look over the reports with an eye for detail. If you notice inaccurate information, immediately report it to the agency. They can remove inaccurate information.
Next, determine how you can improve your score and eliminate the debts compiled on the report. Most debtors work with anyone who makes an effort to pay off their debt. Many eliminate late fees or/and interest, which can significantly reduce the amount of money owed. Debt consolidation and debt settlement programs are additional options that may offer help sorting out your credit.
The credit score is the primary factor lenders use to determine your credit worth and the loan value they’ll offer. According to Experian, expect an interest rate that follows the scale below based upon your credit score:
– 781- 850: Superprime credit score. APR New: 3.8%; APR Used: 4.34%
– 661- 780: Prime credit score. APR New: 4.5%; APR Used: 5.97%
– 601- 660: Non-Prime credit score. APR New: 7.52%; APR Used: 10.34%
– 501 – 600: Subprime credit score. APR New: 11.89%; APR Used: 16.14%
– 300 – 500: Deep subprime credit score. APR New: 14.41%; APR Used: 19.98%
You can certainly decipher the importance of a good credit score from this informative chart. The better your credit score, the less you pay, period. Improving your credit score (where need be) ahead of applying for an auto loan is essential to a smooth purchase that offers you the maximum loan amount for your needs.
Get a Preapproval
Walk into the dealership with a pre-approval and drive out of the dealership happy. Getting lenders to compete for your business is the goal when applying for an auto loan. Interest rates vary significantly as a result. With a pre-approval, you have more buying power and protect yourself against higher rates later down the line. You also reduce the time shopping around for cars that may not be within your budget when you’ve gotten a pre-approval ahead of visiting the dealership.
Apply for Loans at the Right Time
When you apply for an auto loan, lenders make what is known in the industry as a ‘hard pull inquiry.’ Al hard-pull inquiry impacts your credit score. It is easy to ruin your credit simply by applying for too many loans or products, unbeknownst to many people. Apply for any auto loans of interest within a 14-day time period to avoid negative hits to your credit. Inquiries made to businesses within the same type of industry are considered as one hard-pull inquiry and will not deduct any more points from the credit score.
Don’t rush to apply for an auto loan. Although you need a vehicle to help get around, rushing into the buying process certainly puts you at a disadvantage. Keep the above information in mind as you apply for an auto loan and drive off the dealership lot in a vehicle that you love, all without paying excessive interest rates or fees in the process. You can get a great deal via an auto loan when the right information is used in the process.