There are many ways to obtain car financing when getting a new car. Many automobile dealerships have in-house ties to banks that do their financing for them. While this may be more convenient on the part of the buyer, there are other ways that you can finance your own car. You can most likely obtain financing through your own bank or credit union.
When first applying for a car loan you will want to make sure that you have a good credit score and there are no mistakes on your credit history. You can obtain a free copy of your credit report (thanks to the Fair Credit Reporting Act) from any of the three credit reporting agencies at least one time per year.Once you have acquired a copy you will want to thoroughly review the report to verify it’s accurate and free of any disparities.
The kinds of rates that you get on a car loan depend heavily on your credit score. Obviously the higher your credit score, the lower your rate and vice versa. New car loans will generally extend anywhere from 2 to 6 years while used car loans last from 2 to 5 years. Being in excellent credit standing means that you get the best rate and are able to choose how long you are able to pay off the loan.
Be careful when going to many car dealerships. Be sure to bring a current copy of your credit report so that they don’t have to check your credit for you. Remember that repeated inquiries on your credit will impact your score. In most cases if you have a high credit score, are currently employed and have a permanent address, most likely you will get approved for auto financing. You simply need to fill out an application while the lender checks with your employer to see if you are gainfully employed and if you rent your home they will also check if you have been steady and current with your payments.
Many new and used car dealerships have either their own in-house financing or have ties with banks to do the job for them. While new car dealerships generally have reputable in-house financing at respectable rates, the same doesn’t usually hold true with used dealerships. More often than not they will specialize in financing for those with very bad credit or they will charge very high interest rates. It might be a better option to finance the car at a later date and work on improving your credit in the meantime to get better interest rates. Otherwise if you are badly in need of a car, then this option might suit you best.
It is best if you take the time to review your entire financial situation before applying for a car loan. You want to make sure you have enough funds left over each month to make this extra payment. If you fail to repay this obligation it will take a major tole on your current credit standings and you may have a very difficult time obtaining financing in the near future. Not only will it ruin your credit, but the lending institution will go ahead and hire someone to come and repossess the vehicle.
Remember that your financial obligation does not end when you get a new car, but begins. Always select a car that is within your means and can be easily paid off through your car loan.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.