Find the Best Auto Financing
How to Get a Car Loan
Just like with your trade-in, it pays to get competitive offers before heading to the dealership. For the average buyer, once they’ve agreed on a price, the dealer knows they’re on the hook and can slide almost any financing deal through without much scrutiny. But as a smart buyer, you know that the financing you choose can add or save hundreds (sometimes thousands) of dollars onto the life of a loan or lease.
Step 1 – Know your Credit Score
Your credit rating, also known as a credit score, will have the biggest impact on what interest rate you can get on a car loan (or whether you can get a loan at all). A score between 720 and 850 typically guarantees the best rate while dropping below that could affect your rate significantly.
A low credit score can affect your car insurance premiums as well. Insurers use this as an indicator of whether you will pay your premiums on time.
You are entitled to a free credit report once a year from each of the three credit bureaus. So be sure to order a copy from one or all of them (they each receive information directly from lenders and can differ from each other). While the reports are free, your scores are not and are important to know because they affect your bottom line. Check the reports for errors or signs of identity theft and correct them as soon as possible. The credit bureaus’ websites can also provide you with tips to improve your credit and raise your scores.
Each bureau offers different packages and they are purposely confusing…sound familiar? Read the fine print closely before purchasing anything. Credit monitoring services can be valuable, but you can do this for free yourself by getting a free copy of your credit report from a different bureau every four months (each is required to give you a free copy once a year). Again, be aware that lenders can and do report different information to each of the bureaus.
Checking credit yourself will not affect your credit score, however, when lenders check, it has the potential to bring your score down. The credit bureaus will treat multiple inquiries within a 30 day period as a single inquiry, so make sure you are close to purchasing and then get all your rate quotes and fill out credit applications within a short time period.