Here are the best tips on how to get the best loan for your new car
Purchasing a vehicle is one of the largest and most important financial investments that any individual will ever make during their lifetime, excluding the purchase of a home. But the process of acquiring loans for a vehicle can often be confusing. There are many questions to ask leading up to the purchase of a new vehicle and customers need to determine whether they want to buy new or used, whether they want to buy outright or lease and which type of vehicle that they wish to purchase.
However, before any of these decisions can be made, customers need to determine how they will pay for the vehicle. While paying in cash is an option for a select group of new car buyers, most people will have to rely on an auto loan. Determining from where this money will come from can be the trickiest part of the process. Fortunately, there are ways to make the search for the best loan a little bit easier.
Loan pros and cons
While automotive loans can carry several benefits, they are not without their drawbacks. The most obvious benefit is that by using a loan, customers don’t have to pay for their new vehicle in its entirety, all at once. Another benefit is that automotive loans can help build credit. While you need good credit to qualify for most loans, paying for those loans will only improve your credit score. Auto loans, of course, do add another monthly payment to your pile of bills. Keeping up with those payments will be a necessity for many months ahead.
Who provides loans?
Automotive loans are offered to customers through a number of financial institutions. According to Consumer Reports, banks and credit unions are often the most common sources. If you have a good credit standing, then you will be able to attain some of the best loan rates from these institutions. But if your credit score is less than desirable, you may not qualify. Another very common source for auto loans is the dealerships themselves.
Determining which loan is best
Once you determine where you want to apply for a loan, the next step is looking for the best rates across the board. It’s important to pay careful attention, as some loans may look good on the surface, but could spell financial trouble in the future. As vehicle prices increase with each passing year, longer loans become available. However, Herb Weisbaum at CNBC suggests that drivers choose the shortest loan that they can afford. Not only will longer loans cost drivers more in the long run, but paying off a loan sooner removes one more payment each month.
If you happen to find the loan that works best for you before you are ready to purchase your vehicle, then this can be used to your advantage. The DMV says that getting pre-approved for a loan can carry several benefits. If you are pre-approved, this removes a lot of uncertainty during the entire financing process when it comes time to pick up your next set of wheels.
There is no such thing as a perfect automotive loan, as each driver has specific wants and needs. Still, there are processes and guidelines set in place to help you find the right loan for you.Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.