Getting an auto loan is decidedly easier than getting a mortgage or business loan, however that doesn’t mean you should simply walk into the nearest bank and apply for the first deal you get. Here are eight tips that can help you make the most of your auto loans:
1. Explore options
Shop around the way you would with any other purchase. Consider all your options before you settle for an auto loan. For most people, there are two ways of getting a loan – directly from an online broker or financial institution or indirectly from the car dealership. Picking between the two boils down to the interest rate and loan terms you’re offered.
2. Do your research
Research the loan rates out on the open market. Take your time learning about the industry and how your financial history and situation determines the deal you get. If you take the time to understand the current economic environment, you’ll probably get a loan simply by waiting for the right time.
3. Get a credit report
Arm yourself with your credit report before you go out and negotiate a deal. If you know how good your credit score is you’ll be able to push the lender to offer some concessions. Check online for an annual report of your credit history.
4. Consider new models
Dealerships are determined to get newer models sold, so you might be able to pull off a better deal if you go for the latest model and complete the deal in-house.
5. Brief terms
Don’t be tricked by the lower monthly payments on longer term loans. Consider the overall annual rate you’ll end up paying. If you can’t calculate the effective interest rate, ask the loan provider to explain it to you.
6. Talk to an expert
Speak to a financial expert before you make any purchase decisions. Get a consultant’s advice before you sign on the dotted line.
7. Find someone to co-sign
Signing up with someone else is a great option if your credit score isn’t satisfactory. Look around for a co-signer with a decent credit history who’s willing to help you out. Co-signing can drastically reduce the amount you end up paying in interest.
8. Confirm the offer
It may come as a surprise, but some dealers will let you drive a car away even if you lack the financial proceeds. Some dealers trick you into re-negotiating higher rates after you’ve paid a down-payment and taken the car away. Most people in this situation will end up with a worse deal because they don’t want to lose the cash they paid upfront. So, close and confirm the offer before you walk out of the showroom.
These eight simple steps will help you get a great deal on your next auto loan.
