Transportation for most people comes in the form of an automobile. You need your car to get you to work and to get the kids back and forth to soccer practice. It is an important part of your life, and one of the most expensive purchases most people will ever make. If you’re like the majority of people you can’t pay cash for a car, so you will need to borrow the money, hopefully at affordable rates. Here are a few tips on how to get a cheaper car loan.

Check Your Credit

Before you actually go shopping, you should do a little preparatory work first. Check your credit score by going to the Internet website, annualcreditreport.com. According to law you’re entitled to check your credit report for free once each year. You can do so through one of the three credit reporting bureaus, Experian, TransUnion, or Equifax. Knowing your credit status ahead of time will allow you to know approximately how much credit you’ll be able to get, and the interest rate you can expect to pay, which will impact other decisions you’ll need to make. Make every effort to get and keep a high credit rating, because the higher your credit score is, the better interest rates you can expect when you borrow money. If you really need a vehicle now and your credit currently isn’t the greatest, you can refinance car loan terms at a later date when your credit or lending rates improve.

Know How Much Money You Can Spend

Once you’ve received your credit score, you’ll have a better idea of how much money you’ll have to spend on a car. It will allow you to decide what type of vehicle you can reasonably buy—you can’t expect to get a BMW on a Chevrolet budget. You should also remember to consider the other costs that come along with owning a car, such as maintenance, gas, and insurance. Visiting CarInsurance.net will help you determine insurance costs. An auto repair shop can tell you more about the costs of maintenance.

Decide What Car You Want to Buy

Now that you know the approximate amount of money you can spend, it’s time to decide what type of car you want to purchase. Start by doing some research on the Internet. Visit the websites of the various car companies and see what they have to offer in your price range. Don’t forget to save some room in your budget for any options that you don’t think you can do without, such as power brakes or air conditioning. Each brand will more than likely have more than one choice in your price range, but they will all be slightly different. Take a close look at each of the cars that interest you, and then make a decision on the particular one you would like to buy.

Shop Around to Get a Cheaper Car Loan

Prior to actually visiting a car dealership you should shop around for a loan. Check rates online or call a few different lenders to compare the rates and terms available on their loans. Once you are satisfied that you have found the best car loan, go ahead and apply for the loan.

Having financing in place before talking to a salesperson will simplify the process when you do go into a dealership and will give you some negotiating power, hopefully resulting in a lower price.

Seek Private Financing

Call or visit a few banks and credit unions in your area. Tell the loan manager that you’re interested in arranging financing for a car. Discuss the length of the loan with them, and find out what your interest rates and monthly payments would be.

Have Your Information with You

Have all the pertinent information available that the lender will need in order to expedite a loan, such as your credit score and Social Security number. You will also have to provide them with information on outstanding loans, your present address, telephone number, and any additional personal information they may require.

Limit the Number of Lenders You Visit

Each place you visit will run a credit check on you, so you should limit the number of banks and credit unions you visit. Each potential lender will run a credit check on you, and that will impact your credit score. After you receive each bank or credit unions best offer, you should then decide on a lender.

Check with Your Own Lender

If you already do business with a particular bank or credit union you may want to take the best offer to them and see if they’re willing to meet or beat the rate. If you have a good record with them, they’ll want to keep your business and may be willing to provide a good rate.

Dealer Financing

Although you may be able to get better rates by going through your local bank or credit union, getting financing through a dealer will be simpler, because it amounts to one-stop shopping. In recent times dealers have been able to offer competitive interest rates which make financing through Ford Motor Credit, GMAC, or other dealer-related lenders feasible.

Tags: auto loan, car loan, cheaper car loan, how to get a car loan, how to get an auto loan

This entry was posted on Sunday, January 15th, 2012 at 8:56 PM and is filed under Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.