If you are thinking about buying a new car you might be considering an auto loan. An auto loan can be a great choice, since it will allow you to get the car that you want, but if not used correctly it can be frustrating. Here are some things that you should do to make sure that you are getting the best loan possible.
1. Go Through A Credit Union
If you already bank through a credit union, you should use them to get your auto loan. If you don't already have a credit union in mind, search for one that currently has promotions for auto loans. Many credit union will run specials where they will give you a great deal on interest rate.
You should be searching out this credit union before you go looking for the car. Too many people go to the dealer and then they let the dealer tell them who they should get their loan through. The dealerships have a relationship with certain credit unions, but that doesn't mean that they are the best price. Instead, you should be seeking out the loan, and when you do they will tell you how much they will give you. This will give you hard numbers to know what you can afford.
2. Don't Finance An Older Car That Will Depreciate Fast
When you meet with the auto loan lender they will tell you what kind of car you can get. If you are wanting to only get a couple thousand dollar loan, they will let you get just about anything, however, if you are wanting a bigger loan they will have rules of how new the car should be. They most likely won't pay for the loan on a car that is depreciating quickly in value. The reason for this is that they don't want you into a 5 year loan on a car, when by year 3 you owe more on the car than the car is worth. This is why they will give you a model year that they won't go below and a shorter loan so that you aren't paying off the loan year after the car has died.
3. Lower Credit Score= Higher Interest Rate
Just know if your credit score isn't very good, you will pay a higher interest rate. The credit score greatly affects how much you pay in interest, which is why you need to focus on keeping your score down.
By understanding these things you can get the best loan for your needs.
