The Top Four Factors to Consider When Looking At Auto Loans

It can be inconvenient, if not downright difficult, to get around without having your own car. Unless you can easily take public transportation, walk, or bike to all of your destinations — work, the grocery store, the drugstore, the doctor’s office, and anyplace you like to go for fun — you pretty much need a car.

Trouble is, cars are expensive. And not many people can cough up the necessary cash to get one without a car loan. At borrowers get the best possible deal on an auto loan, so that getting behind the wheel of your new vehicle will be much easier.

There are a few things to remember when it comes to car loans, so we’ve put together this basic guide to give you an overview of the topic.

First, there are several different places to get a loan. The dealership where you’re buying the car is an obvious, and convenient, choice; you may get a better interest rate, however, by going directly to your bank. Dealers are highly motivated to arrange a loan for you, since they often profit by doing so, and they may very well employ some dirty tricks to get you to sign on the dotted line. Do your own research and compare the terms of the loans you’re offered before making a commitment.

Second, your credit score will affect the terms of your loan, particularly the interest rate. You can often still get a loan even with a poor credit score, but you’ll be paying through the nose for it. The only way to know what you’re dealing with is to check your credit score before loan shopping. Then, act fast and apply for loans within two weeks, since many times your credit score will take a hit when a lender checks it.

Third, are you looking to pay less overall, or are you willing to pay a higher total in order to save some cash temporarily? A longer auto loan will generally cost more in total, but your monthly payment will be less. If you can afford to pay more each month, on the other hand, you can reduce the length of time before the loan is paid off and the total amount you will pay in interest.

Fourth, don’t rush into anything. You may be tempted to do whatever it takes to secure the car of your dreams once you’ve found it, but don’t sign anything until you fully understand the financing agreement or loan terms. Make sure you know the length of the loan, the monthly payment, the interest rate, and whether or not you’ll be getting any kind of rebate. Adjustable rates and prepayment penalties should also be considered carefully before you agree to the purchase. Remember that this is one of the most important investments you’ll ever make in your life — auto loan agreements are not something to be entered into lightly.

Do your research, be fully informed, comparison shop, and read the fine print. Then you’ll be able to enjoy your new car without worry!