Automotive: How to Get the Right Car Loan: 4 Tips and Tricks
Finding a favorable deal on an auto loan is worth doing, because the right package can save you thousands and fit your requirements down to the ground.
Of course, your search for a good offer from a reputable lender won’t go smoothly unless you know what to look for and how to maximize your access to the juiciest deals. Our top tips for securing an attractive car finance product will improve your chances of making this move successfully.
1. Build up a deposit
The more money you have to put down to secure a loan, the better the terms of the agreement with the lender will be.
As well as having a smaller sum to repay, you’ll also be granted deals with lower interest rates, which in turn means that your monthly repayments will be more manageable.
While it’s not the only factor that is judged when determining loan eligibility, a big deposit will reflect positively on you as a prospective customer.
2. Check your credit score
Learning about your credit score and taking steps to improve it is sensible no matter what type of financial product you’re looking to acquire.
A higher score singles you out as being a responsible individual, and so again you’ll have your pick of affordable car loans.
If your credit score isn’t where it should be, you can boost it by doing things like paying down existing debt and checking for any anomalies in your credit history which might be holding you back.
3. Consider which type of loan you need
There are lots of different car loans available, so it’s worth weighing up the top options, such as:
Preapproval loans
Loans for which you have already received approval before applying take the stress out of the process. Of course, since preapproval loans expire, you need to act decisively to nab the top packages.
Bad credit loans
Even if your credit score is in the doldrums, some lenders will still accept you as a customer. Just be prepared to face higher interest rates, which in turn will mean that you’ll either need to repay over a long period to make the monthly payments affordable, or swallow the higher costs month by month.
Secured loans
One way to keep costs lower is to opt for a secured car loan, which means you’ll be putting up another asset as collateral, such as your home. The drawback is that failure to pay might result in the aforementioned asset being repossessed.
Unsecured loans
As the name suggests, an unsecured loan won’t require you to risk an asset as collateral, so there’s no chance of repossession in this instance. Higher interest rates do make this less appealing if you are mainly interested in minimizing monthly repayment costs, though.
4. Keep your choice of vehicle in mind
Before you go ahead with taking out a loan to buy a vehicle, it’s best to think carefully about whether or not the car that’s in your crosshairs is actually a good option.
There’s no point overstretching yourself to get the latest and greatest model if you won’t use any of its features, or you can’t afford the repayments and insurance costs as part of your monthly budget.
Being savvy and buying a car that hits the sweet spot rather than being an unnecessary indulgence is an undeniably effective way to get the right loan as well.
Wrapping up
The more time you spend looking for a car loan and researching the products on the market right now, the more value you’ll be able to extract from the deal you eventually pick. A slow and steady approach should be a no-brainer in this scenario.