AUTO LOAN 101: THE BASICS
A brief primer on what to do before and after:
BEFORE visiting the dealership:
DURING your visit to the auto dealership:
AFTER you've signed, and bought your new vehicle:
As you can see, most of the work is to be done BEFORE you set foot in the dealership. Most lower-credit car buyers get cleaned out because they've failed to find as much about their own personal and credit history as the dealer. By knowing your credit standing, you can avoid being sucked into a longer payment contract (which will cost you more in the long run) at a higher interest rate. Not to mention prevent yourself from being scammed into taking extras you aren't required to buy. Don't be fooled by attractive-sounding "lower monthly payments"; it's the total number of payments, plus the interest rate you'll pay, that you need to focus on.
A brief primer on what to do before and after:
BEFORE visiting the dealership:
Figure out what you can afford to pay for the auto you want.
Decide if you are leasing or buying.
Find out your credit score; the higher your score, the lower the financing rate you'll get.
Find out your credit score; dealers have been known to claim lower scores than their customers actually have.
Compare annual percentage rates; see who has the lowest rates from a variety of banks and credit unions.
Go online and research the car you want for rates and price. You can start with sites such as edmunds.com.
Before you decide on the model, know your driving profile: e.g. are you an urban commuter or a local driver?
DON'T be tempted to get financing for more than 4 years; it'll help you avoid going "upside down" on your loan.
Decide if you are leasing or buying.
Find out your credit score; the higher your score, the lower the financing rate you'll get.
Find out your credit score; dealers have been known to claim lower scores than their customers actually have.
Compare annual percentage rates; see who has the lowest rates from a variety of banks and credit unions.
Go online and research the car you want for rates and price. You can start with sites such as edmunds.com.
Before you decide on the model, know your driving profile: e.g. are you an urban commuter or a local driver?
DON'T be tempted to get financing for more than 4 years; it'll help you avoid going "upside down" on your loan.
DURING your visit to the auto dealership:
Keep in mind the price you decided you could afford; never go above it.
Don't be talked into taking "extras" beyond the sticker price such as guaranteed auto protection.
Watch out for claims such as "the bank won't give you a loan unless you purchase an extended warranty"
Read the entire sales contract carefully, and don't let anything -- or anyone -- stop you from doing so.
Any questions you have about the fine print, don't hesitate to ask; same with terms and fees.
Don't be talked into taking "extras" beyond the sticker price such as guaranteed auto protection.
Watch out for claims such as "the bank won't give you a loan unless you purchase an extended warranty"
Read the entire sales contract carefully, and don't let anything -- or anyone -- stop you from doing so.
Any questions you have about the fine print, don't hesitate to ask; same with terms and fees.
AFTER you've signed, and bought your new vehicle:
Be sure to make your loan payments on time; late payments will sink your chances to get credit again.
Did you secure a sufficient insurance policy? Now's the time to double check with your provider.
Sounds obvious, but take good care of your car; depreciation is bad enough without neglect.
Did you secure a sufficient insurance policy? Now's the time to double check with your provider.
Sounds obvious, but take good care of your car; depreciation is bad enough without neglect.
As you can see, most of the work is to be done BEFORE you set foot in the dealership. Most lower-credit car buyers get cleaned out because they've failed to find as much about their own personal and credit history as the dealer. By knowing your credit standing, you can avoid being sucked into a longer payment contract (which will cost you more in the long run) at a higher interest rate. Not to mention prevent yourself from being scammed into taking extras you aren't required to buy. Don't be fooled by attractive-sounding "lower monthly payments"; it's the total number of payments, plus the interest rate you'll pay, that you need to focus on.