7 Must-Know Car Loan Tips
Before you make your next vehicle purchase, read these tips to get the best auto loan for your needs.
If you’re considering buying a car, odds are you’re thinking about getting an auto loan as well. Below are seven crucial tips about auto loans that will help you find a financing solution that’s a good fit for your needs, so that when the time actually comes to buy a car, you’ll be ready to roll.
Know before you go
Your credit score is an important factor when it comes to qualifying for lower interest rates. That’s why it’s important to know exactly what it is before you apply for a loan. At UW Credit Union, you can monitor your score for free, and we offer tips for improving your credit health. You also may want to consider requesting a free credit report from one of the three main credit bureaus, which you can do once every 12 months. That way, you can review your credit report, just in case there are any mistakes that may need correcting. Want to take a deep dive into improving your credit situation? Take advantage of our free Credit Consultation service.
Aim for shorter terms
If your financial situation allows for it, choosing a shorter loan term offers certain advantages. Not only will the interest rates be lower the shorter the term, but you’ll save by paying less overall for your vehicle. Plus, you’ll be on the path to paying it off sooner. If you can’t afford the monthly loan payment on the car you want with a shorter-term loan, then you might consider waiting until you can make a slightly larger down payment.
Pay it down
Whatever your dream car may be, the bigger your down payment on it, the lower your interest rate will be. At a minimum, you should try to put down at least 20%. And, the general rule of thumb is that for every $1,000 you put down, your monthly payment will decrease roughly $18.
Time it right
Timing is everything, especially when it comes to buying a car. If you can, wait until the later months like October, November, or December to shop. Also, try to look later in the month and earlier in the week, as these are the times when salespeople are trying to meet their quotas, and therefore are more likely to negotiate down to lower prices.
Cover those taxes & fees
Among the things that often are overlooked until the end of the car-buying process are the taxes and fees. If you can, try to account for these in the beginning of the process, and pay them off in cash. It may sound like a small detail, but it can save you hundreds of dollars over the course of your loan.
Refinance & save
There are many situations where refinancing your existing car loan can save you money. Your credit may have improved, or maybe you just want to lower your monthly payments. Whatever your situation may be, refinancing may be the quickest way to a better interest rate. Try this calculator to see if refinancing might be right for you.