Need a New Car? Then You May Also Need a New Auto Loan.
If you can walk into a dealership, pay for a new car with cash and drive it home the same day, congrats, you’re Jay-Z! For the rest of us, an auto loan is the key to getting a vehicle. So what is it and how do you get one?
An auto loan is simply a loan given in order to buy a new or used vehicle. You can find them through dealerships, banks, credit unions or even online. With an auto loan, the lender is technically the owner, but you have exclusive access to the vehicle while making monthly payments. Once you’ve finished paying off the loan, that fancy new Maserati (or Honda Civic, whatevs) is yours! But make sure to get a monthly payment you can manage, because failing to pay means the vehicle will be seized.
Use an Auto Loan Calculator
As with any loan, you’ll want to know what you can afford before speaking with the lender or dealership. One way to figure this out is to use an auto loan calculator. You can find free auto loan calculators online and they can be a useful tool in your search for a good deal.
The most basic info required to use an auto loan calculator is the amount of the loan you’re seeking, the interest rate, and the loan period. Once you enter this info, you’ll see how much your monthly payment will be, and how much the loan will actually cost—including interest . Having other information like the trade-in value or sales tax is helpful and can give you a more accurate idea of what to expect.
Here are some of the top online auto loan calculators:
Know your credit score
Before you pursue an auto loan, you should know if your credit is in good standing.
In order to find out your credit-worthiness you’ll want to order a free copy of your credit report. You can also use any number of websites to check your FICO score for free (creditkarma.com, freecreditreport.com, credit.com, etc.). But while a free credit score is nice, a free credit report is better. A credit report will have more detailed information on your credit history because saving a good credit score can be a major bargaining chip in your auto loan negotiations.
Time to Negotiate!
If you’re planning to get an auto loan, you’ll have to negotiate — at least a little bit. Getting the upper hand in the negotiation could mean a lower overall price for the vehicle, as well as more manageable interest rates.
One way to advantage yourself in an auto loan negotiation to show up with financing. If you can get approved for a loan through a bank or credit union, bring the approval to the negotiation. Showing them that you already have an option for financing may lead to the dealership or lender to offer you a better rate than the one you’re approved for. And if they can’t, you’ve already gotten a loan anyway!1
No matter where you go for your auto loan, or how you decide to negotiate, remember that you have the final call. If you aren’t comfortable with the terms, don’t be afraid to walk away and shop around more. And if you’re looking for an affordable, flexible loan that can help get your credit back in shape, OppLoans can help. Apply today for a better personal loan that will set you up for success.
- Deaton, Jamie Page. “How to Finance a Car and Get a Car Loan” U.S. News. May 17, 2013. Accessed February 9, 2016. https://usnews.rankingsandreviews.com/cars-trucks/How-to-Finance-a-Car/
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