Cars are necessary. There’s really no other way around it. Sure, many cities and areas offer great public transportation and ride-sharing apps let us call a ride whenever we need one, but the vast majority of Americans need a car or truck they call their own. Owning your own car means freedom. Unfortunately, finding the right automobile isn’t always as easy as picking out the style and color you want.
Most of us are confined by budgetary restraints and limited loan options because of financial history. So, if you find yourself in a situation of this type, what can you do to make sure you get the best auto loan possible?
Know your Credit Score and Credit History: Your Credit Score is going to be the single largest contributing factor to the quality and favorability of your auto loan. Credit scores range from 350-850. The closer you get to that 850 mark is when you get 0% Interest Loans and every lender banging at your door. Something important to understand is you can typically get an auto loan with a credit score over 600, but you’ll be paying as much as 29% interest on the life of that loan. Making sure your credit report is accurate and you have the highest score possible is essential for the best loan possible.
Read the Fine Print: There’s always going to be some risk when purchasing a new or used automobile. Much of that risk is out of your control. However, there are some things you can do before signing on the dotted line that will ensure you’re not being taken advantage of in the loan process. While most of us tend to click the “I Agree” button every time it pops it, this is not a good practice when making a significant purchase. Take the paperwork home with you so you can read it over thoroughly. If the person trying to sells you car tries to talk you out of it, walk away. Check for things like “Mandatory Binding Arbitration,” “Variable Interest Rate,” and “Prepayment Penalties.” All of these can be designed to extract more money from you than you originally thought you were signing up for.
Do Your Homework: Make sure you’ve done your due diligence on the dealership or financial institution you’re thinking about buying from. Assuming others have your best interests in mind when spending thousands of dollars on a car or truck isn’t going to get the best deal. Make sure those you’re buying from have a good reputation outside of their own website.
Shopping for a new automobile can be a fun and exciting experience for those who understand the process and the tools necessary for success. For those who aren’t aware of how to get the best loan possible, the process can turn into a mountain of regrets and thousands of dollars lost on a bad loan. Don’t let that happen to you.