3 Ways To Save Money On An Auto Loan When You Purchase A New Car
If you are in the market to purchase a new car, saving a little money can go a long way. If you want to save money on your purchase, you need to know a few strategies for bringing down your overall costs before you start hitting up dealerships.
Know Your Credit Score
The first thing you need to do is make sure that you understand your credit score. This is important to the car buying process. If you have a poor credit score, you are not going to be able to score the great interest rates that the dealership is advertising for a new vehicle. The best credit rates, such as no money down, are reserved for individuals with basically perfect credit scores.
However, just because you have an average or lower credit score doesn't mean that you have to settle for a sky-high interest rate. You can still ask and try to get a lower interest rate when you have a poor credit score, it may just take a little shopping around to find the right lender who is willing to work with you.
Knowing your credit score will give you an idea of the type of interest rate you qualify for and will give negotiating power when you know your credit score and it is not a surprise.
Look for Lenders
Second, it is important to realize that you don't have to go through the dealership for financing, although you can. If you have a lower credit score, you may have better luck looking at alternative sources for auto loans. You may have better luck trying to see what type of loan you qualify for with a local bank, credit union, or even an online lender.
When you are shopping for a car, the credit bureaus usually give you a month to a month and a half grace period where they will count all the hits to your credit score as one hit instead of multiple hits. This is to help you out and allow you to shop around for the right car loan without ruining your credit in the process.
Keep the Loan Terms Short
Third, longer loan terms have become increasingly popular. That doesn't mean that you have to fall for a longer loan term, however. Long loan terms are great for lenders, but they are not so great for you. Long loan terms mean that you are paying more interest over time, which means that you are paying more for the car over time.
You shouldn't go for a loan so short you can't afford the payments, but you shouldn't stretch your car loan out over six or seven years. The longer you stretch out the car loan, the more the car is going to end up costing you in the long run.
If you want to get a car loan without paying too much, know your credit score, don't be afraid to shop around for the best terms, and keep your loan as short as possible.