Even though I’d love to walk into a dealership with a check to pay for a car purchase, not everyone has the ability to do so. For all the rest of us, this means we must get a loan.
A car loan consists of the bank paying for the total amount of the car and you make payments to the bank until the loan is paid in full. But what goes into getting a car loan? Here are some things you may want to remember or do before searching for that car you want.
How much can you afford
You may know exactly which car you want… in fact, you may have been dreaming about it for weeks or months before deciding to just head out to get it. However, you much make sure you can afford the car before applying for a loan. Be sure to figure out what a safe amount is for your budget and keep that in mind when shopping. The monthly payment isn’t the only thing that that is included in that safe amount, don’t forget about other costs, such as insurance, fuel, and maintenance.
Know your Credit Rating
Now that you’ve gotten a safe amount in mind, knowing your credit rating is important as well. You know what you want to pay when it comes to a car but that also depends on how much the bank is willing to give you, plus the interest rate. The worst off your credit score is, the harder it will be for you to afford the car you want.
Shop around for loans before hitting the dealership
Since you know your credit like the back of your hand, sometimes its better to find a loan before heading into the dealership. Yes, I know the dealership you want to buy your car from advertised zero interest but there is a possibility that you don’t qualify. Prequalifying makes sure you have Check in hand, you won’t have to worry about figuring out payments while waiting for the salesman to come back with the bank’s approval. You never know whether or not you’ll get a better loan from a bank you deal with or the finance department at the dealership. Be ready with both.
Be ready to hand out other information
The bank doesn’t just want to know your credit score, they’ll need to know your address, phone numbers, social security number, and other items. There are plenty of items they need other than your credit score to make sure you qualify for the loan including where you work and how much you make.