Loan delinquencies and automobile repossessions in the US are on the rise as a result of too many Americans getting in over their heads with new car purchases. One factor that can quickly send us over our budgets are our car loan rates. We apply, shop around, and choose the best rate we can find, right? What if we told you that you can take a few extra steps to ensure you achieve the best car loan rate possible?
Before you head to the dealership, make sure you do your homework.
Know your budget. Do some calculations, run numbers, and figure out how much you feel comfortable spending each month. Don’t stretch yourself to the limit; instead, give yourself some ‘just-in-case’ wiggle room. Remember, your monthly payment won’t be just a payment for the car itself – you need to factor in insurance and interest rates. And, don’t be caught off guard by one-time fees, registration, and taxes at the time of purchase.
Check your credit report. Know your credit scores from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. “You want to check all three because you don’t know which one the lender will use and you want to give yourself time to fix any mistakes,” said Gerri Detweiler, director of consumer education for Credit.com. “I found a mistake when I went to buy a car a few years ago, and if I hadn’t straightened it out, it would have cost me a lot of money.”
Shop around. Search around for loans with good rates. Dealerships can often offer some of the best rates, but keep in mind that advertised rates carry a disclaimer no matter where you look – those rates are for customers with excellent credit.
Choose the shortest loan you can afford. While it may seem appealing to choose the longest term loan possible for their small payment, keep in mind that every month you carry that loan, you’re paying interest. Loans that carry long terms generally have higher interest rates, making your car more expensive in the long run.
Learn more about tips and tricks to obtaining the best car loan here.
Now that you have your ducks in a row, stop by Devoe Cadillac. We’ll help you find a car and financing that fits into your budget.