There is not a whole lot in this world that is more exciting than getting keys to a brand new car! The hard part comes when it's time to actually pay for it! So, unless you are a very rich celebrity who has enough cash to pay for it in full, you will most likely have to get an auto loan from somewhere. If you follow the following six keys to getting a good deal on an auto loan, you can be confident that you got a great deal when everything is said and done.
The first key to making sure you get a great auto loan, is managing your credit. One of the very first things that you need to do before you apply for a car loan, is to check your current credit score. If you live in the United States, you are entitled to one free credit report each year from each of the three major bureaus, so take advantage of this. After you've read your credit score, see if there is anything you can take care of, or fix before applying for your loan. If you have an excellent credit score, there is a much better change that you'll get approved to buy the vehicle you really want.
The second key to making sure you get a great auto loan, is knowing what sort of a budget that you have to work with. This mainly has to do with getting pre approved by the bank. Pre qualifying tells you how much you are allowed to get potentially, but being pre approved means you already have a bank willing to give you the money you need.
People who are good at budgeting already know this, so if it seems like common sense to you, that's a good sign that you have your head on straight. Take a look at your budget, and determine how much you'd like to spend each month on your car loan. Remember to not strap yourself.
The third thing you should do is look at the big picture. You're going to want to take into account how much the loan will cost in the long run. Make sure that you get a low interest rate, because you could end up spending as much as 50% more than the car actually cost if you're not careful. Go with the bank that will give you the cheapest interest rate, this is probably the most important part of all.
Fourthly, make sure that you factor in your new insurance plan. In most states, it's illegal to own a vehicle if you do not have car insurance. So knowing before hand that you will have to buy some, remember to put that into your budget. Having good insurance can help you in getting a loan. Life insurance and health insurance play into this too. If you have them, it shows the lender that if an emergency happens you won't be piled under a ton of debt, and you'll still be able to pay them each month.
Lastly, remember to shop around. All auto loans are not created equally, so the wisest thing to do would be to shop around for 5-10 different options for you to choose from. An unfair auto loan can be the straw the breaks the budget's back if you're not careful, so remember to look for the above factors, and use them in your decision making when it comes time to get that new vehicle.
