Top 10 tips for securing the best car loan for you
Do you want the best car loan possible? Now is a good time, since interest rates are low, and there are plenty of cars to choose from. Here are 10 tips that can help you get the best deal on a car loan:
1. Shop at the end of the month
One of the best things you can do is shop at the end of the month. Dealers and salespeople are taking to reach their quotas, so you can get a good deal. This means a lower loan amount, which means a better loan altogether.
2. Check your credit
Know your credit going in. A good credit score means a lower car loan interest rate and better terms overall. Do what you can to improve your credit ahead of time so that you get the best loan rate.
3. Shop around
Don’t just accept the first loan offer available. Shop around to see if you can get better terms. Many different banks and other financial institutions offer various terms, so make sure you are getting the best deal.
4. Get the loan separate from the car
While you’re shopping around for a loan, look someplace other than the dealership. When you get a car at the same place that you get the loan, you might not get the best deal. This isn’t always the case, but you should consider going with someplace other than the dealer.
5. Think in terms of the total loan amount
It’s tempting to get sold on a particular payment. However, it’s important not to get hung up on the monthly payment, since that can lead to a bigger, more expensive loan. Instead, set a limit on the loan amount, and don’t get trapped into talking monthly payments. You don’t want to get a five-year loan when a three-year loan is your goal.
6. Ask about dealer incentives for new cars
While you don’t want to default to dealer financing, it can make sense in some cases. When you are buying a new car, there are often dealer and manufacturer incentives involved. This can mean a much cheaper loan, and you can get upgrades, or get extra cash that can be used for a down payment. Ask about these incentives to get the best possible deal.
7. Bring a sizable down payment
You also want to bring a big down payment. The larger your down payment is, the lower your interest rate is, and the lower your loan amount is. This means you spend less money over time, and you can get a better deal.
8. Shop for loans within a two-week period
All inquiries for car loans within a two-week period are treated as a single inquiry by credit scoring algorithms. In order to avoid it looking like you’re applying for a lot of credit, shop for loan rates close together.
9. Stay away from conditional financing
Watch out for conditional financing. You want everything finalized before you take the car off the lot. If you have “contingency” financing, you could end up stuck with terms you don’t like.
10. Don’t make snap decisions
You don’t have to decide right then. Avoid making snap decisions, and instead, carefully think about the loan terms and the lender before signing the papers. Make a clear decision, rather than one that might be rushed due to circumstances.