tips for getting a great auto loan

28 Sep

10 Simple Tips for Getting a Great Auto Loan

10 Simple Tips for Getting a Great Auto Loan

For those with a tight budget, bad credit or a poor credit history, getting a loan for a car may seem overwhelming. But securing a good deal is still possible with these few tips for getting a great auto loan!

Getting a good auto loan is not out of your reach if you head into the process with a strategy and are prepared to do some groundwork first. Even those with poor credit can follow these 10 steps to getting a great auto loan!

10 Steps to Getting a Good Auto Loan
  1. Know Your Credit Score: Whether it’s great, average or poor, don’t pursue an auto loan without knowing your score. If it’s poor (typically below 620), take steps right away to improve the score by paying required bills on time. It’ll improve before you know it!
  2. Protect Yourself with Pre-Approval: Visit a few trusted institutions, like your local credit union, to get pre-approved for the loan you’re pursuing before heading to the car lot. This puts power to negotiate in your hands, as you know from a trusted source what you are already approved for. If the dealer tries to sell you a loan with rates much higher than what you’ve been approved for, all you have to say is, “Well, at my local credit union I was pre-approved for this rate.” Negotiation is key!
  3. Research and Prepare: Research your desired vehicle before even stepping onto the lot. Know the MSRP (manufacturer’s suggested retail price) and the value of the car in Nada, an industry standard book detailing the values of cars of all makes, models and years. This information adds power to your negotiation!
  4. Know (and Stick To) Your Budget: Know how much you are able to pay for the entire vehicle, for the entire term of the loan. So often, dealers and lenders will try to sell a car out of your price range but offer a “manageable” monthly payment. Don’t allow yourself to get sucked into only looking at how much you’ll be paying monthly. Step back, look down the road, take into account how much you’ll be paying in interest over the course of the loan, and ask yourself if the entire price is worth it.
  5. Shop Around: Get to know your loan options and your car options. Don’t stop with the first car at the first lot you visit.
  6. Look for Early-Payoff Loans: Paying off your loan early or even paying more than the required monthly payment can save you hundreds in the long run. But, oftentimes, lenders will impose a costly penalty if you try and pay off your loan early. Before committing to a loan, check with your provider to make sure you have that ability to pay off early. If not, see if there are other options before committing.
  7. Be Prepared to Negotiate: Doing ample research, getting pre-approved, and knowing your overall and monthly budgets will help you walk away with the best loan for you.
  8. Avoid Uncredible Alternatives: Buy-here-pay-here lots and cash-fast loan operations are often unreliable and don’t provide the best options. It may feel like it’s your only option if you keep hitting brick walls, but know that the cars on these lots are often overpriced and the cash-fast loan offices offer higher interest rates designed to make you default on the loan. Protect yourself from these places by doing your research, visiting a credit union and talking with a trusted financial guide.
  9. Opt for Affordable: With manageable monthly payments, it can be tempting to choose a car that’s way out of your price range. Choose a cheaper, reliable car you can truly afford and stick to your budget.
  10. Stick to Your Guns: Know your budget, get pre-approved, know your research and stick to your guns. Know your options and don’t sell yourself short by taking the first offer made to you. When you know your options, you have the power to make the best choice for you!

Have any questions about how to secure a good auto loan? Give us a call today or swing by a branch!