Modern Money – How To Get A Car Loan

Financing a vehicle today is so much more efficient because of a streamlined application process. Waiting hours in a dealership is not only antiquated but it is also one of the most expensive ways to purchase a vehicle. However, to avoid the wait, consumers have to come to the car-buying experience prepared.

In today’s consumer-driven society, anyone can finance a vehicle through a number of avenues. In addition to your traditional dealerships, financing can come through conventional financial institutions, credit unions, online banks, and other lending sources. So much power and control have been given to the consumer in terms of finding a car loan provider that the onus is on the consumer to go into a dealership armed with information.

Continue reading to learn how you can secure the best car loan for your needs and ensure you get the financing you need.

Know Your Score

Just after you have finalised a preliminary budget, get a copy of your credit history before even for a loan. Your credit history is a very important part of the car loan process in that it determines your creditworthiness, and in many cases, it determines your interest rate as well. More significantly, though, check your credit report for any dings and inaccuracies because it influences so much on the application.

Also, checking your credit report can prevent snags that might arise when actually applying for a loan. In these cases, the institution you are applying to will ask you to explain any discrepancies or derogatory remarks on the report, so it is always better to have a copy of your file before applying for a loan. In any case, most of the major credit reporting agencies will furnish one free copy of your report once a year, so obtaining at least one copy should not be difficult.

Get Pre-Approved

One of the greatest conveniences of the modern banking institution is the pre-approval. The pre-approval process asks you to submit the requisite information, which includes pay stubs, a formal application, and a tax id number, in addition to other supplemental materials. The financial institution will then provide you with an amount with an interest rate after looking at your credit report.

The pre-approval is the next best thing to sliced bread for a few reasons. For one, it provides you with a dollar amount, which limits how much you can spend shopping for car from the time you find a car to the actual purchase. In the end, this reduces the amount of time spent in the dealership. Ultimately, the pre-approval streamlines the process, so that when you find a car it is only a matter of paying the dealership.

Research Your Options

When looking for a car loan provider, research the benefits of each type of loan. Generally, credit unions and online banks offer competitive interest rates but do not exclude traditional banking institutions because you can also find good deals here. Finally, other information to keep in mind before seeking a loan includes determining how long you want to pay on the car (loan term).

Those with good credit can pick and choose from a variety of loan programs, and those with poor credit should avoid subprime lenders altogether because you end paying way more for the vehicle than it is worth. A better solution for those with poor credit is to have a sizable down payment to reduce the principal on the loan. In either case, having a sizable down payment really helps reduce the interest rate and the monthly payment.

Finding A Loan Program

Most of the work in purchasing a vehicle is in searching for an appropriate loan program that offers an affordable interest rate. Once armed with the requisite information, applying and getting pre-approved for a loan is quite simple. With your pre-approved amount, you are on your way to securing new wheels.