Some buyers are able to purchase their automobiles with cash; for all the rest, getting preapproved for a loan is necessary. Of course, as with any loan, this can seem daunting—but it doesn’t have to be. Here are a few quick tips for navigating the used car loan process.
Start with a Credit Check
Before you do anything else, check your credit report. The higher your credit score is, the better. Indeed, a high score will qualify you for lower interest rates, and it may even make you eligible for a lower insurance premium.
As you check your credit score, also be on the lookout for any unusual activity. If you see late payments or penalties that you believe to be in error, make sure you dispute them.
And if you happen to have a low score, don’t panic. This won’t prevent you from getting a loan, necessarily. What’s more, there are things you can do to potentially raise your credit score—paying off debts, ensuring your bills are paid on time, not opening any new credit lines, etc.
Have a Budget in Mind
Know roughly what your budget is, how much car you can afford, and how monthly payments will fit in with your larger financial goals. As you think through your budget, don’t forget about the various expenses that come with car ownership—including:
– Registration/titling fees
The bottom line: You need to know how much room you have in your budget for automobile payments.
Shop Around for Lenders
Not all lenders are created equal, and it’s smart to meet with a few different ones so that you can compare interest rates, as well as customer service. Make sure you talk with banks and credit unions; generally speaking, you’ll want to avoid loans that come directly from dealerships, though sometimes they will make you good offers.
As you shop around, you may also want to ask about preapproval. This can make things go much more smoothly once you actually set foot in a dealership and start looking seriously at cars.
One note: As you meet with dealerships, they will want to run credit checks for you—and too many credit checks can actually cause your score to go down. If you get all these credit checks within 14 days, though, they will count as a single credit check—which means they won’t hurt you.
Look for a Car You Can Afford
In the end, it’s critical that you seek a car that fits in with your budget—and for most drivers, that means heading to a used car dealership. You can save a lot of money on the sticker price and still get a reliable car with plenty of life left in it. (Of course, due diligence—including some online research and a test drive or two—is still needed.)
For help locating a reputable used car dealership in your neighborhood, reach out to Get My Auto today.