According to Experian, lenders are becoming more flexible in approving auto loans with longer terms. So how can you take advantage? Follow these suggestions to find and compare loans that you’ll be happy with for years to come.
Know Your Credit Score
Before you look into auto loans, you should first look up your credit score. You’re entitled to a free credit report every year from each of the three major companies: Equifax, TransUnion, and Experian. If you haven’t checked your score recently, the FTC recommends ordering your credit report online from annualcreditreport.com, the only authorized website for free credit reports.
The higher your credit score is, the better terms you’ll be able to negotiate with the dealership. If you’re worried about your credit score being low, take some time to improve it before seeking an auto loan. You may be able to raise your score by paying off credit cards or reporting errors on your credit report.
The auto-finance business is enormous and has many different lending institutions. The largest lenders are usually banks, such as Bank of America or Chase. But the auto companies themselves are big lenders, with departments such as Ford Motor Credit, Honda Finance, or Toyota Financial Services. Some of the best loans can come from an auto company, but there are plenty of other fish in the sea that may offer you better terms. Other potential lenders include local banks, credit unions, and small finance companies, each with varying policies.
Regardless of which lender you go with, it’s a good idea to shop around before committing to a specific loan.
Compare Your Bank
If you’ve been with your bank for a while, it’s a good idea to check auto loan rates with them first. Banks will often give their existing customers affordable options to help them buy a vehicle. Most banks allow you to check their current auto loan rates online, but you should stop by a branch office instead, so you can personally speak with a bank employee about your needs. Speaking directly is a good way to control where your personal information goes, and can help avoid mistakes in the application process. Check with your bank and you might just end up with a great offer.
When you’re at the dealership, it might be hard to tell if you’ve been given a “good” offer. Fortunately, there’s a way to ensure you get a fair one; by comparing dealers. Not all deals are created equal, and the offer you get from one dealer may pale in comparison to the offer from another. Some words of advice: If asked, tell the salesperson you are planning to purchase that day. This will make it easier for them to justify offering you their best discounts. You can also take that offer to another dealership to see if they will beat it. Pitting two dealerships against each other can be an effective method to getting the deal you want.
Last but not least, be sure to read all documents before you sign anything. Occasionally, mistakes in the paperwork can cost the buyer money.