Before you begin the car buying process, there are some important things you should understand regarding car loans. Going in with the right information will ensure you make sound decisions. Here is what you need to know.
1. Know the required credit score
Among other things that influence the lender’s decision to give you a loan, your credit score is the most important. Whether you are getting the loan through an auto loan dealer, a bank or the dealership, the rate depends on your score. Remember that different lenders utilize different scoring system. One lender will allow a certain minimum while another will want a higher score. So, check your credit score and find a company that can give you financing in your current status.
2. Apply to auto loans within a 14-day span
Your score keeps fluctuating depending on your creditworthiness. So, if you check your score today, it might not be the same after a week. However, it will not change much within 14 days, so consider taking the loan within this time. Keeping your application within two weeks is instrumental in curbing the negative impact.
3. Shop for the car only after your loan has been pre-approved
It is always advisable to go to a dealership after receiving a financing offer from your lender or bank. A pre-approved offer is a guarantee of a loan that will cover the price of the car you wish to purchase. Most importantly, it provides you with extra leverage. When you have a lender-approved check, you will be considered a cash buyer.
4. Do your math before agreeing
You ought to understand the factors that affect your setting of the monthly car repayments. The APR rate will affect the monthly installments by a small margin. The crucial factors include whether you have down payment or nor, the amount you require as well as the loan term.