When most of us purchase a new vehicle, we cannot pay for the car outright and we need to get an auto loan. The process of getting a new auto loan is often more intimidating than finding the right car.
There are a few simple steps that you can take to make it easier to get an auto loan. The first thing that any financial institution is going to look at prior to giving you a loan is your credit. You should take a few steps to make sure that your credit is as good as possible. These simple steps will help you increase your credit score and get a better loan.
- Run a credit check on yourself. This can be accomplished through many Internet sites, most of which will offer the service for free. Simply go to a search engine like Google and type in "Free Credit Check" to find a good site. Knowledge is power, and knowing your own credit score is going to be the most powerful weapon you have in getting a good auto loan.
Review your credit score and make sure that it is accurate. Once you've run the credit check on yourself, confirm that the information is correct.
Pay off or consolidate bills and high interest credit cards. If you can pay off credit cards, that is your best bet to make an impact on your credit score. It is critical that you have a debt to credit ratio of less than 50% to get a better credit score. Outstanding and late bills can also negatively impact your credit.
After you've checked your credit score, you are ready to apply for your loan. You may apply for your loan either before or after you have found the vehicle you wish to purchase. It can be beneficial while shopping for a car to know how much you have been approved for.
Here are the most common ways to get an auto loan:
- Finance with the dealer. All major automotive manufacturers have credit unions and finance services at the dealerships. If you are purchasing new or used, the salesperson will probably push the dealer's financier more than some of the upgrades on the car. The salesperson will walk you through the paperwork to finance through the manufacturer after you agree upon a price.
At a local bank or credit union. Nearly all banks and credit unions will offer auto loans. To obtain a loan quote, visit your local branch and request to speak with an auto loan specialist. You will be asked to provide some basic information, a credit check will be run, and you will be advised as to whether or not you were approved for the auto loan.
Through the Internet. The newest way to get a loan is through the Internet. Major financial institutions, like Bank of America now allow you to apply and qualify for a loan online. Point your browser to your bank of choice and follow the links to auto loans. Some banks will contact you by phone after you complete the necessary information while others will approve you instantly.
You've now found your loan. Go out, find the vehicle of your dreams and then sign the necessary papers to complete the transaction.