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20.02.2015 - 20:06

5 Auto Loan Shopping Tips to Consider before Stepping on the Car Lot

Your car loan will be a rather significant expense for several years, so it is worth the time and effort to shop around before making a final decision.

Unless you plan to pay for your next vehicle with cash, you will need to apply for an auto loan. An auto loan provides you with the opportunity to pay for your vehicle with equal monthly installments over a period of years, making the cost of your purchase more affordable. Some car buyers will simply apply for the loan with their dealership's financing department. This may be the faster and easier solution, but it is not always the most affordable way. Keep in mind that your car loan will be a rather significant expense for you for several years, so it is worth the time and effort to shop around. Before you visit your car lot, follow these important tips:


Review Your Budget

You do not want to take on new debt that is unaffordable for you. When you purchase a new vehicle, several of your expenses will change. This includes the car loan payment, your auto insurance premium, and your gas and vehicle maintenance expenses. The professionals at Car Credit who specialize in used cars in Tampa suggest that you update your budget based on projected expenses for the new vehicle that you have your eye on. This will help to ensure that you structure a loan payment that is affordable for you.


Compare Interest Rates

When you initially start shopping for an auto loan, you will undoubtedly see ultra-low interest rates advertised, but these are not always the rates that you will qualify for. Your location, credit score, loan amount and down payment are all critical components in the final interest rate you will qualify for. You may need to contact auto lenders directly to obtain a personalized quote.


Review Your Credit Report

You may already have a fair idea about what your credit scores are, but it is always smart to request a copy of your credit report before you apply for a new loan. This will ensure that the lender you apply with is not trying to give you a higher rate than you may qualify for. If you notice any errors on your credit report, you may take a few weeks to fix the errors before applying for your loan.


Use a Car Loan Calculator

After you have a fair idea about the rates that you may qualify for, you can use a car loan calculator to generate an estimated payment. Consider estimating payments for different term lengths. This will help you to know which term length is most affordable for your budget and most suitable for your financial goals and plans.


Get Pre-Approved

A final step to take is to get pre-approved for a car loan. You should apply for the best loan that you can find, and you can take the pre-approval letter with the loan terms to the financing department at the dealership. Typically, the dealership will try to beat the terms that you have presented to them. Therefore, your pre-approval letter may serve as a worst case scenario financing offer, and it will encourage the lender to present you with their best financing terms.


If your plans to purchase a new car include applying for an auto loan, you want to get the best deal possible. By following these tips before you visit the car lot, you will be able to shop with confidence and finalize your purchase more quickly.

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