Getting approved for an auto loan before you head out to a car dealership can save you time, money, and put you in a better position to push for a deal. However, shopping around for an auto loan can feel overwhelming- before the real car search even begins. Going to the bank to get approved for an auto loan can feel daunting (and, whoever got in and out of a bank quickly?).
Using a few online tools, you can compare loans that fit your needs efficiently and painlessly.
Shopping around for an auto loan doesn't have to be a time-consuming stress-fest. Using a few online tools can give save you time and money while shopping for your new car. Here are some step-by-step ways to remove the stress from getting your next auto loan.
Before You Shop
Before you even begin looking for auto loans, there are a couple of steps you can take to simplify the process and make it more stress-free. Here are a couple ways you can plan ahead and save a ton of time further down the line.
1. Know Your Credit Score
Before you begin looking at auto loans, it is important to know what you will be facing. Loans of all kinds, including auto loans, look at credit scores to determine a number of factors and qualifications for loans. Knowing your credit score can prepare you for potential interest rates, co-signing options, and term agreements. You can find out your credit score for free through CreditSoup?.
2. Calculate Your Budget
Look at the state of your finances realistically. If you have Ferrari dreams, but a Toyota budget, you may need to adjust your expectations. Fully understand the limitations of your budget. How much can you put as a down payment? How much can you truly afford to pay a month? Once you know your monthly household budget, consider how much a month you can afford for your car payment. Once you know your budget, stick to it.
3. Compare Auto Loans for the Best Rates
Comparing auto loans before you settle on the loan that fits your needs can save thousands in the long run, throughout the life of your loan. Small interest rate differences can save you tons of money, even if they don't seem like that big of a difference. You can find a list of reputable lenders and even apply online through our website.
4. Finding the Best Deal
Going to the dealer can feel incredibly overwhelming. We have all been at the dealer eyeing a new car, but dreading talking to pushy salesmen who use slimy sales tactics to trap you in a terrible auto loan. It is easily the worst part of the entire car buying experience. By getting pre-approved for your auto loan ahead of time you cut all of that out and have the upper hand when negotiating at the dealership.
5. Negotiate at the Dealership
When you are buying a car with a pre-approved loan you are, essentially, paying cash for that car in the eyes of the dealer. This allows you to eliminate any 'magic math' that beefs up the dealer fees, keeping more money in your pocket. Additionally, dealers often try to negotiate a low monthly payment, while adding time to the length (term) of your loan at a higher interest rate. The higher the interest rate and the longer the term of the loan, the more money you are paying over the lifetime of that loan.
Furthermore, knowing and setting your limits before you step onto the dealership gives you firm boundaries to negotiate with. The more rigid you are forced to be, the more flexible the dealer must be to accommodate that sale. Getting your loan ahead of time gives you more leverage in negotiating your loan while ensuring that you get the best terms. Better yet- you understand these terms because you set them yourself.
Getting a Great Deal
By coming into a dealer pre-approved for a loan of your choosing, you are removing the back room financing, while taking advantage of the dealer/manufacturers deals. When you walk into that dealer you can streamline the process by knowing exactly what is in store, and only looking at vehicles in your price range. Face the dealer free of fear and apprehension by getting your auto loan before you head out to that car dealership!
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