Know your credit score
Whenever you’re thinking about taking out a loan, your credit score is one of the most important factors. Whether you go through a bank, an auto loan dealer, or the dealership, your credit score will contribute to the lender's provided interest rate. With a recent credit report, you can see your credit score, any derogatory marks, and other items that have an impact.
If you don’t know your credit score, you’re entitled to one free credit report every 12 months. Visit annualcreditreport.com or call 1-877-322-8228. Alternatively, you can complete a Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Shop around and compare loans
You can secure a car loan from banks, credit unions, dealerships, and online lenders. Dealerships may seem more attractive with offers such as 0% financing or cash back rebates, but it’s important to understand those refinancing options are geared toward the highest qualified buyers. That’s why it’s important to have a recent credit report on hand. Evaluating and comparing your options is essential. Doing so will help you find the optimal loan for your needs.
Get pre-approved first
Once you’ve secured pre-approval for a loan, you know exactly the loan amount you can afford. Typically, you can get a pre-approved car loan from banks, credit unions, and online lenders. Another benefit of the pre-approved designation is the additional leverage you have when buying. You’re effectively a cash buyer with a pre-approved loan. You don’t need to think about the monthly payment but you can think about the price of the car outright.
Calculate costs before signing the dotted line
It may be tempting to rush through the paperwork the second you find the car of your dreams, but take a moment to calculate the costs. There are four important factors to evaluate:
- Total loan amount. How much money are you borrowing to cover the total cost of the car?
- Down payment. Do you have a down payment? If so, how much?
- Loan term. How many months will you make a payment? Generally, the longer the term, the lower your monthly payment.
- APR. The annual percentage rate includes fees that contribute to the origination of the loan. It usually is a higher amount than the interest rates and provides the overall estimate of the loan cost.
Use our car financing calculator to figure out the principal and interest amount on your monthly car payment. You can even determine how much you’d pay monthly if you elect for a shorter or longer loan term.
Our expert loan advisors can walk you through everything you need to know about car loans. We’ve helped our community secure their vehicles since 1934. You can contact us online or give us a call at 816-241-7800.