Follow these steps when getting your car loan

Buying a vehicle is probably on the top 5 biggest investments anyone will make in their lives. These decisions will cost you a lot of finances, which is why you want to take your time and follow the right steps. While some people can afford to purchase a vehicle out of pocket, most of us need some sort of financial aid. One great option is to get a loan and clear the payments as you grow. Like other loans, it is always important to be prepared financially before taking it on. With enough cash on the down payment, starting the whole process is quiet simple.

Follow these steps when purchasing your first vehicle

Check your credit card score

The score will determine the amount of cash you get from different type of lenders. Auto loan dealers and banks always check the credit card score before approving any loans. The amount of money you get is highly dependent on the rates by the lender and your credit cards score. Remember, lenders may have different criteria when it comes to their rates and how they disperse the car loans. Keeping your application within 14 days will help reduce the negative impacts that come with a bad credit score.

Go for a pre-approval before shopping

Just like the process of getting a mortgage, it is always a great idea to get a pre-approval letter from lenders and other professionals before you go shopping. Private lenders, auto lenders, banks, credit unions and other institutions offer pre-approval letters for people seeking to purchase a vehicle.  It is never a good idea to walk into car dealerships without the financial facts and offers from your lenders. Pre-approval letters are a guarantee that you will get the loan to purchase the vehicle. Additionally, you can use it as leverage when negotiation for vehicles from different lenders.

Calculate the total cost before you make the final decision

Before getting a loan or a vehicle, you need to look at your finances and determine if you can really afford it. Remember, you have to make monthly loan repayments and a huge down payment to clear the loan. Large down payments can save your finances in the future. You receive a smaller loan and less interest rate which will take you less time to pay.

Understand the type of dealerships

Financing a car can appear simple and attractive when it’s actually no. sometimes, the deals look questionably good and we fail to realise it. Ensure you read all the regulations before you make a final decision when you are purchasing the vehicle. Look out for the following

The length of term

You may end up having a longer payment plant than you should have. Some lenders charge lower monthly payments for an extended period of time. the longer you pay the loan the more the financial burden while the vehicle continues to depreciate in value.

The penalties

Some lender will impose pre-payment penalties on your loan. this means that you will have extra charges when you clear the loan before the documented time.

The interest rates

Interest rates are very different depending on the lender. Compare different lenders to ensure you make the right final decision.