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What you should know about Auto Loans

At sometime in your life you are going to want a new car. That being said, you have to find ways that you are going to pay for it. You might opt to borrow from friends or family to help you make the deposit. However, you may not have these resources available to you and you have to go with an auto loan. These loans can be confusing and most times people don’t really understand them. What they do know is that they can sign the dotted line and walk away in a cool car. Auto loans can be good and bad at the same time. We have to pay attention to what we are signing and who is offering the loan. Here are some things to know about auto loans.

Credit Scores

To get the best auto loan you will need to have an excellent credit score. Most people don’t realize this when it comes down to looking at the financing being offered to them. A credit score can keep you from that dream car if you are not paying attention. Do yourself a favor and make sure you have a good credit score before taking on any auto loan. With a bad score you will find that the financing is much higher and they might want a deposit.

Ask beforehand what kinds of credit they are looking for when trying to get into a new car. You could be surprised where the auto dealership might give you a break and try to work something out based on your score.

Dealer financing

Dealer financing can be tricky and those who know what to look for should only use it. Too many people fail to read the fine print and end up signing their life away. They are stuck paying thousands of dollars more than the car is actually worth. Dealer financing needs to be approached slowly and bring a friend who knows accounting if you can. This can help ease the pressure of you being talked into a contract that you can’t get out of. Study dealer financing at the place where you want the car.

Do as much research in understanding all terms and what your responsibility will be to the dealer. Ask as many questions that you can about their financing even if they seem silly. There is no such thing as a stupid question when you are trying to prevent yourself from getting into a financing contract you don’t want.

Rates

Think about the rates a auto dealer is offering you on a loan. This can make a big difference over the lifetime of the loan. Shop around and see if you can get a better rate for the loan somewhere else. You don’t have to take their rates if you don’t want to. Most people believe that they do as it can stop them from getting the car that they desire.

The loan rate makes a difference because that will determine how high your monthly payment is going to be. Most of us have no idea of what the car’s payment will be until we get the bill. We are shocked to see that it has spiked up so high that we will be struggling for months to pay it.

Your bank

Consider using your personal bank for an auto loan. You don’t have to use the financing offered at a dealership even though they make it seem like you have to. It’s not the only financial tool out there to get your car. Your bank has been knowing you for years and they know how you handle your money. They should be the first step before you ever consider getting an auto loan somewhere else for your car. Call your bank and tell them what you are trying to do and compare rates for their auto loans. It could be better or it might be higher, but at least call and ask. Banks are now trying to bring in more customers than ever before so you might have a chance to get an awesome rate.

It’s can be tricky when dealing with a car loan. We all are not experts and car loans can throw us for a loop. Many of us don’t know what to ask about an auto loan because the writing is to intimidating. Your credit score will be a deciding factor when going for an auto loan. Make sure you’ve paid down some debt before you head to the car dealership. You also don’t have to be dependent on the financing a auto dealer offers. Consider the rates of the auto loan as well. It might be so high your monthly payment will not match your wallet. Head to your bank first before taking on any loan from any dealership.

Also Read: DID YOU JUST GET A BRAND NEW CREDIT CARD? YOU MIGHT WANT TO LEARN FROM THESE PAST MISTAKES BEFORE YOU USE IT

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