Auto financing is not as easy to obtain as it was in the past. Even though dealers are willing to sell you a car at practically any price and manufacturers have opened the floodgates and released dealer cash, customer rebates and even special finance incentives, the fact remains that auto financing has become much more restrictive.
Here are some tips to help you with auto financing:
Know your credit score and credit history. Your credit score and credit history are what banks and other lenders use to approve your loan application and decide which interest rate you qualify for. Getting a copy of your credit report before you apply for a loan gives you the chance to correct any errors on your report and can result in raising your FICO score.
Shop around for auto financing before you pay a visit to the dealer. Even if the dealer is offering lower interest rates, in many instances these are only available to the most qualified buyers. If you don’t qualify for the best rates, the next-best rate might be higher than a pre-qualified loan you get from your credit union. It also may give the dealership the leverage they need to go back and negotiate a lower interest rate with their lender (stranger things have happened).
Online auto financing web sites often have calculators that can help you determine a budget for your new car as well as allow you to input various lending scenarios so you can determine what the least expensive loan for your particular situation. You can do this at home and print out the information so that you can take it with you when you go shopping.
Buy the vehicle, not the deal. A great auto financing rate on a gas-guzzling vehicle is not a good deal if gas prices hit $4.00 a gallon again and you can’t afford to fill the tank. Likewise, a big rebate on a small car isn’t a good deal if you vacation using your car and your family can’t fit into it comfortably, along with all their luggage.
