There’s a lot to consider when borrowing money to pay for a car, and it’s easy to feel overwhelmed. It may be tempting to just resign yourself to the most prevalent car loan rates available at large banks and accept the first loan offer you receive. But the good news is that there are ways you can come out on top. Here are a few things you can do to get the best loan offers.
Check Your Credit Score
The first thing every prospective borrower should do is check their credit score. This will give you an idea of where your credit stands and if there are any errors on your report that need correcting. If there are issues with your report, contact the bureau in question and dispute them accordingly. The Federal Trade Commission says that having errors on your report could result in lenders offering higher rates after seeing lower scores—so clean up those reports as much as possible before applying for financing.
Know What You Can Afford
It’s important to know exactly where you stand financially before applying for a loan. So, have a look at your latest credit card bills or bank statements and see where your money goes each month. If you don’t know where all your money goes, try keeping track of your spending for a few months to get an idea of where it all leaks away. If you have any debts, make sure they’re paid off before taking out another loan or putting down a deposit on a new car.
Don’t Focus on The Monthly Cost Alone
When you’re looking for a car loan, you probably want to find one that will keep your monthly payments as low as possible. But while monthly payments are certainly important, they aren’t everything. Dealers often try to encourage you to apply for a loan by emphasizing what you will have to pay each month. And that does matter, of course, for budgeting purposes. But to get those low monthly payments, you will probably need to extend the loan out years, which can increase its overall cost.
