For many people, getting a loan is the only way they can afford to get a vehicle. Unfortunately, car financing can lead to feelings of stress especially if you end up with monthly payments that are out of your budget. Car owners can feel extra stress from this debt and many will end up paying thousands of dollars in interest over a 60-month loan.
As the cost of buying a vehicle rises, shopping for the best car loan and interest rates should be at the top of your priority list before settling on your desired vehicle. If you’re entering the loan market and looking to purchase a car, you’ll need a few money-saving moves to help you get the financing that fits your budget.
- Know your credit status.
Without knowledge of your credit score, you won’t know what interest rate you can qualify for. By checking to see if you have an issue with your score, you can take the steps necessary to improve it before you apply for a loan. Did you find your credit score is higher now than when you started your loan? You may be able to refinance your loan to a lower rate and payment. Check various personal finance websites to find where you can get a free credit report.
- Shop for the best rate.
Before stepping into a dealership to find your ideal car, you need to start loan-shopping. Submit online loan applications or call your local lenders. There are many options out there so you don’t need to rely on the dealer to give you a loan. Instant Auto Loans allows you to apply online and get processed in 15 minutes.
Compare loan offers based on the loan term, loan amount, and the downpayment. The more money you put into the downpayment, the less you’ll have to borrow. You’ll end up saving more money on interest and you may get a better rate.
- Stick to your budget.
Use a loan calculator to estimate your monthly payments once you know the interest rate that you qualify for. It’s recommended that you don’t spend more than 10% of your take-home income on your loan payment. Once you include gas, insurance, repairs, and maintenance, you don’t want to spend more than 20% of your income. Keep in mind that you can extend your loan term to get lower payments but you will end up paying more interest over time.
- Get a preapproval.
Get financing before you go to the dealership to get the most competitive rate. In some cases, you can get a preapproval with a quick online application. Try searching car manufacturer lending companies for low-interest financing deals.
- Review the contract.
Make sure to review your loan contract carefully. Even though it may be long and wordy, read it in its entirety before signing. Mistakes can happen and sometimes they can be intentional. It’s also a good idea to use a loan calculator to double-check all the numbers. Ensure that no additional fees or warranties have been added if the numbers don’t add up. Question any fees that appear to be hidden or that weren’t discussed initially.
Before you head to a dealership, you can secure financing at Instant Auto Loans. We offer instant auto loans based on the equity of the vehicle. Apply online and have your loan processed in 15 minutes.