The smell of a new car’s interior is temptation enough to trade in your old vehicle. Buying a new car shows that you have a steady income with some style in your back pocket. Completing the transaction, however, can be difficult for first-time buyers. Paying for the vehicle is the first hurdle you’ll encounter. Before you picture yourself behind the wheel of that favorite vehicle, learn how to find the best car loan.
The Internet is a vast resource when it comes to borrowing money. Go online, and apply for a loan with any reputable lender. Some websites allow you to fill out one application that covers dozens of different lenders too. In essence, you aren’t limited to local banks with few resources. These online lenders will notify you of any offers after they check your credit. They use your credit history as a gauge of your risk. Take a look at the interest rates and loan amounts that they offer so that you can see what’s affordable in your budget.
A traditional way to find the best car loan is through your bank. This lender knows your transaction history, income and other details. In many cases, you have a better chance at borrowing money at a lower interest rate when you use your own bank. Be aware that credit unions tend to have better pricing compared to corporate banks, states Consumer Reports. Sit down with a representative, and discuss your options. Regardless of the lender, bankruptcies and late bills can be a negative factor if they exist on your credit report.
Negotiate on Vehicle Pricing
Whether you’re preapproved for a car loan or not, you still need to negotiate a final price with the dealership. Look for dealership sales and other indicators that the facility is willing to work with customers. Salespeople tend to fixate on monthly payments so direct your interest in the entire cost of the vehicle. Negotiate an “out-the-door” price on the desired car. Lowering the car’s cost will reduce the ultimate loan amount. You may be able to afford a high-quality car if you negotiate the cost down to your budget’s goal.
Ask for Dealer Offers
Dealers have many discounts that they can apply, but this information isn’t usually shared with customers. Ask about factory and dealer rebates because both of these items are separate from each other. Other discounts can be found by negotiating costs with a sales manager. A vehicle might be an older model with some damages, for example. Hundreds or thousands of dollars can be taken off of the sticker price when you know what to discuss with the sales staff.
Hold Onto Your Preapproved Offers
If you have preapproved auto loans, keep these documents to yourself as you negotiate with the dealer. The loan amounts shouldn’t influence the haggling process. Keep the amounts in mind as you work with the dealership because the value is set by the lender. In most cases, you can’t renegotiate a preapproval because the amount is based on your income and liabilities.
According to USA.gov, every dealership has some financing options. After agreeing on a vehicle price, ask about dealer financing. Their accountants will come up with a figure that they hope will appease you. Compare it to your preapproved numbers, and try to negotiate a lower interest rate. The dealership wants to retain your business so they may match your preapproved offers or even beat them.
Walking Away is Possible
Committing your time and effort at a dealership means that you want to make a successful deal and walk away with a car. If negotiations aren’t going well, don’t be afraid to leave. There are dozens of dealerships in one state alone so you don’t have to settle for a deal that’s less than desired.
As you consider a new-car purchase, keep up with your other bills. Being a responsible borrower means that you pay the bills on time each month. With this habit, you’ll increase your credit score and improve your history. At that point, car loans should be easy to obtain with reasonable fees attached to them.