While it’d be great if you could buy a new car without having to take out a car loan, this just isn’t a reality for most people. But if you do it right, you can secure a car loan that will work for you in both your monthly payments as well as help you to save money over time. So to help ensure that you make a wise financial choice the next time you buy a new car, here are three tips for finding the best car loan offer available to you.
Improve Your Credit Before Applying
Before you start applying for a car loan, you should spend some time building up your credit score. The lower your credit score is, the worse your car loan offers will be. The interest rates will be higher, you won’t be able to get approved for as much money on your loan, and you might have to go with less reputable lenders. To help you in improving your credit, NerdWallet.com recommends that you focus on being consistent with all your payments on your current lines of credit. If you can pay down your current debt ratio, that could drastically improve your credit score as well, giving you a much-needed boost right before you begin applying for car loans.
Heavily Weigh The Length Of The Loan
Once you’ve found some options for your car loan, it’s important to know how to weigh the variables in order to uncover which loan is actually going to work out the best for you. When looking at a loan offer, Jon Linkov, a contributor to Consumer Reports, recommends that you heavily weight the length of time that you’ll be paying on the loan. While a longer loan might be lower monthly payments, a shorter loan will often have you paying less money in the end. Additionally, a shorter loan will allow you to avoid being underwater on your loan for an extended period of time. So if you’re able, try to get a loan with a shorter repayment period to save you money long-term.
Look For Low Interest Rates Along With Added Benefits
Ideally, you should try to get the lowest interest rate possible when looking for a car loan. By doing this, you’ll be paying less in interest throughout the life of your loan, which can save you thousands of dollars over time. But not only should you be looking at interest rates, according to Mackenzie Maxwell, a contributor to The Balance, you should also consider other benefits that your lender might offer in addition to low rates. Especially if you’re getting the same low rate from two different lenders, start looking more into the details of the loan or the financial institution itself to learn which one is actually the best option for you.
If you’re wanting to buy a new car soon, consider using the tips mentioned above to help you find the best car loan option for you.