Before you make your next car purchase, read these tips to get the best auto loan for your needs.
Fathers and sons sitting in the open back end of their cars prepare for a fun adventure.
If you’re considering buying a car, chances are you’re also considering applying for an auto loan. Here are 7 key tips on auto loans that will help you find a financing solution that’s perfect for your needs so that when the time comes to actually buy a car, you’ll be ready.
Know before you go
Your credit score is an important factor when it comes to qualifying for a lower interest rate. That’s why it’s important to know exactly what it is before you apply for a loan. At Washington University Credit Union, you can monitor your score for free and we offer tips to improve your credit health. You might also consider requesting a free credit report from one of the three major credit bureaus, which you can do every 12 months. This way, you can review your credit report in case there are any errors that need to be corrected. Want to improve your credit situation in depth? Take advantage of our free credit counseling services.
Aim for a shorter term
If your financial situation allows it, there are some benefits to choosing a shorter loan term. Not only will the shorter the loan term, the lower the interest rate, but you’ll also save money on the purchase of a car. Plus, you’ll be able to pay off your debt faster. If you can’t use a short-term loan to make the monthly payments on the car you want, then you might consider waiting until you can make a slightly more substantial down payment.
Pay it off
No matter what your dream car is, the more you put down, the lower your interest rate will be. At the very least, you should try to put down at least 20%. A general rule of thumb is that for every $1,000 you pay, your monthly payment will be about $18 less.
Timing is right
Timing is everything, especially when it comes to buying a car. If you can, wait until October, November or December to do your shopping. Also, try checking later in the month and earlier in the week, as this is when salespeople are trying to meet their quotas and are therefore more likely to negotiate lower prices.
Pay those taxes and fees
Things that are often overlooked before the end of the car buying process include taxes and fees. If you can, try to explain them at the beginning and then pay them in cash. This may sound like a small detail, but it can save you hundreds of dollars over the course of your loan.
Refinance and Save
There are many situations where refinancing your existing auto loan can save you money. Your credit may have improved, or you may simply want to lower your monthly payments. Whatever your situation, refinancing may be the fastest way to get a better rate. Try this calculator to see if refinancing is right for you.
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