Purchasing a reliable automobile often requires securing financing. Depending on your credit history, obtaining a vehicle loan may or may not prove challenging. Several options are available, including dealer financing.
Order your credit report and score. Your credit rating offers a good indication as to whether you'll get approved for an auto loan. Order reports from Annual Credit Report and get your credit score from Myfico.com. A score in the high 600's or above increases your approval odds.
Talk with multiple lenders. Check auto loan rates with two or three different banks to acquire the cheapest interest rate on the loan. Speak with your personal bank, the dealership's finance company and one other finance company. Use online lending sites to compare rates and obtain a pre-approval.
Evaluate your finances. Review your monthly budget to see how much you can realistically afford to spend on an auto loan. Subtract your current expenditures from your take-home pay to assess your disposable cash.
Aim for a down payment. Buying a car with a down payment lowers the sale price, which in turn reduces your loan balance and monthly payment. Use personal savings as a down payment or put aside cash each month until you have enough money. Consider a 10 percent to 20 percent down payment.
Stick within your price range. Determine the maximum amount you're willing to pay for an automobile. Use an auto loan calculator to help you determine a price. Visit multiple dealerships to review their selection. Negotiate the price with the salesperson. If the dealership is unwilling to budge on the price, walk away from the deal.
Submit your loan application. After comparing auto loan rates and terms, complete an application with the lender that offers the best finance package. Be prepared to show proof of income such as paycheck stubs or tax returns.
