Odds are that you will be financing a vehicle when it comes time to buy your next car. The auto financing process can be confusing with a lot of numbers and things to keep in mind. But you can make better choices by keeping a few helpful auto financing tips in mind.
Know Your Credit Before You Start
It's very important to check your credit reports and scores before getting a car loan. The interest rate you are able to qualify for is directly tied to your credit score. Therefore, look yours up and research online what rates you can expect. Doing so will help you with this next tip.
Shop Around for Financing: It Won't Hurt Your Credit Score
You shouldn't accept the first rate you are offered. Different lenders have different programs and will offer different rates. So, you should shop around and look for the best interest rate available to you.
If you do loan shop, it's possible that multiple lenders will pull your credit. But don't worry about these hard inquiries hurting your credit. If you do all of your loan shopping in a short period of time, all inquiries will only count as a single inquiry when it comes to your credit score.
Also, try to get pre-approved with a bank or credit union before visiting a dealership. This way, you will have an interest rate and a max amount you can spend, and the dealership can still try to beat that with their own lenders.
Don't Extend Your Loan Term Just for the Lower Monthly Payment
As weird as it sounds, sometimes having a higher monthly payment means you are saving money. You are in control when it comes to setting the loan term, and many people get caught up trying to obtain an affordable monthly payment instead of focusing on the total cost of the loan.
This is a bad strategy for people who aren't able to qualify for a super low interest rate. The low monthly payment seems nice, but an extended term means more interest charges will accumulate. This can make the total cost of financing the vehicle hundreds, if not thousands, of dollars more over time.
Do yourself a favor and always consider the big picture when choosing the length of your car loan.
You Still Have Options if You Have Credit Issues
If you have bad credit, thin credit, no credit, or even credit issues like a past bankruptcy, it's still possible to get approved for an auto loan. However, you will most likely have to look for an approval beyond most traditional banks and lenders.
Instead, you need a dealership that has connections to subprime lenders. These lenders are willing to work with people with damaged credit. They do so by evaluating factors outside of your credit score, such as your income and employment history.
However, note that borrowing with bad credit comes with a higher than average interest rate. This changes the process a little bit. It will help if you buy an affordable vehicle, provide a sizeable down payment, and keep the loan term as short as you can afford to.
Helping Those with Bad Credit Get Approved
If you need to finance a car with poor credit, it can be tough finding the connections that can help. This is why Drivers Lane has simplified the bad credit auto loan process. If you work with us, we will quickly and easily match you with a dealership in your area that stands to give you your best shot at being approved. Our dealership connections may even be able to get you approved with little or no money down.
To get the process started, all you need to do is fill out our free and secure online application. It only takes three minutes to complete and doesn't put you under any obligation, so you have nothing to lose. Start today!