With everyone facing a credit crunch, buying a car is definitely not an easy job. Paying the total price of a car outright is a far-fetched dream for most people. This is where a car loan becomes necessary. Finding the best car loan deal in your area will take you time and effort. Follow the steps below to do just that.
1> First of all you need to understand the basics of car loan. Banks work as lenders who will lend you money which you will repay within the loan period. You will be charged a rate of interest which you will be liable to pay. Before deciding on a lender you need to do a thorough research.
2> Decide on the loan term. The loan term simply means the time period within which you are going to repay the loan you have taken. Car loans usually have a loan term for 24, 36, 48 or 60 months. Most probably you will be paying a monthly installment. Technically the lender will be the owner of the car till you repay the loan. You won’t be getting the car title before you fulfill your obligation. The best car loan deal would be one that lets you pay off the loan within the shortest time possible.
3> Auto loan lenders charge different rates of interests to different people. Why? The min reason is individual credit history. In case a person has good credit, he will be charged a lower interest and a person with bad credit will be charged a higher interest. This is because the former has a history of making regular payments while the latter has a history of missed and late payments. A lender considers offering a loan to a person with bad credit risky because there is a higher risk of default payments. As such, the lenders charge a higher rate of interest. Improve your credit score to get the best car deal in your area. Pay off your old debts and make timely payments for 6-9 months before you apply for a loan. Never disclose confidential financial information or data, your social security number, etc. as it may be misused by unscrupulous lenders for nefarious purposes.
4> Apply to as many lenders as you can. Talk to your bank, local credit unions and other lenders. You will have to fill out a lot of auto financing application forms. Be honest and never ever inflate your financial status. Be truthful because a lender will check everything before he decides to offer you a loan. Study all the quotes you have been given and don’t just settle for the lender offering the lowest interest. Look out for additional payments you will have to make in case of some lenders. Avoid them.
5> You will be a fool if you assume that the local car dealership will offer you the best car loan deal. It could be better if you go to them with financing from a bank or some other lender.
If you do get rejected, don’t worry! Opt for a less expensive car or subprime car lender. Finding the best car loan deal in your area will be easy if you know what you are getting into.