4 Things to Know When Getting a New Car Loan

If you’re financing a new car then it’s important that you don’t step into the situation blindly. In other words, there are some things you need to know to make sure that you find a great deal for the new car that you’re looking to buy.

Your Credit Rating is Crucial

If you have yet to be introduced to your credit score, now is the time to shake hands and say hello. Your credit score and reports from the 3 bureaus are extremely vital to the type of new car loan you will be presented.

If your credit score is high, you will receive a low interest rate. If your score is low, your interest will be high. See the correlation? So before you set foot in any dealership or bank, take time to learn about your credit score and what it means to your loan. It can make a big difference in your monthly payments.

Shopping Around is Also Important

Depending on what company you work with to secure your auto loan, your low credit score may not be a factor. So shop around at banks, credit unions, car dealerships and especially online financial institutions to compare rates before settling on one. You may find a rate even with a low credit score.

Save for Your Future

Think about Getting a Used Car When New Ones Are Released

If you want a cheaper car loan, you might consider getting a used car when the new models are released. For instance, around August 2010 the new 2011 models will likely be released. This means the 2010 models will suddenly become used cars even though some may have never been driven. At this time, the dealers will likely lower prices on the cars to move them off the lots, so you can take advantage cheaper loans.

You Can Always Refinance

If you’re having a difficult time finding an affordable interest rate for your car loan because your credit score is just too low, you may have to settle for a higher interest rate now. But the good news is that because it’s pretty easy to refinance, so if you spend a few months fixing up your credit, you may be able to refinance at a cheaper rate once you raise your score some.

Securing a new car loan can be tricky. But by considering these tips, you can place yourself in a great position to find a car loan you can afford.

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About the Author

Stacey Bumpus

Stacey Bumpus holds both her Bachelor and Masters degrees in Communications. After spending years in corporate communications, she discovered freelancing was really her cup of tea and fell in love with finding and writing about the latest financial news. Now, providing news and tips about banking, mortgages, taxes (and even logging her own efforts to save for retirement), she's not only fulfilling her lifelong passion, but also helping others manage their finances responsibly.

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