It's helpful to check your credit rating before applying for car loans. The higher your credit score, the lower the interest rate you will be able to secure for your car loan. If your credit score is low, consider postponing the purchase of your vehicle, while you focus on paying your bills on time and improving your credit score.
Before you plunge into the car financing process, bone up on your understanding of the different parts of a car loan. You don't want to be confused when evaluating your financing options. Here are the car loan terms you will need to understand:
Boost your negotiating power by getting pre-approved for a loan before you visit the dealership. Prior to making an offer on a car, contact a bank, online bank or credit bureau to apply for loan pre-approval. Walking into the dealership with your pre-approval in hand shows you have a solid financial understanding and an actual offer to compare with the dealer's best offer. The dealership will have to meet or beat your standing offer in order to get your financing business.
You have three main sources of car loans: Auto dealerships, banks and credit unions. Go ahead and shop around to determine which financial institution can give you the best loan that meets your needs. Take advantage of online loan calculators to plug in loan amount, down payment, interest rate and term of loan to determine what your monthly payment will be. Be sure to evaluate the total purchase price and any associated fees, in addition to the required monthly payment.
Learn more about buying a new car with these insider tips from Phil Reed at Edmunds.com.
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