Getting that car you've always wanted to own requires some effort on your part to make it happen. In the United States, comparing car loans is an unwritten law that you shouldn't overlook.
Beyond imagining how special it will be, you first need to have accurate information and address how you can get the best deal.
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How to find the best car loan?
Whether you opt for a car loan or a personal loan, there are all sorts of alternatives to turn to. Along with banks, you can turn to online lenders, credit unions, dealerships and online matching services.
As part of your research, you need to know what each has to offer and what terms seem best for you.
But before comparing between various car loans, we suggest you estimate how much down payment you can afford, the respective fees and the total cost. With this in mind, the key points to get the most out of this negotiation are:
Know the amount you can ask for
Basic information from the lender or bank involves knowing if what they are offering covers the total cost of the vehicle you want and can afford.
Determine if the terms fit your budget.
On this point, it is essential that you evaluate the terms of the contract and see if they are favorable to you once you calculate the costs associated with the operation.
Making sure you are eligible
From a logical point of view, it makes little sense to apply for an auto loan when neither the car nor you meet the requirements established by the lender. To find out what they ask for, check online reviews or the official websites of the selected lenders.
Find out the actual interest rate
Generally, the promotion of a high minimum interest rate is not a good sign, or the fact that they do not want to disclose it to you, makes matters worse. When there is a chance that the rate is so high that it is not possible to advertise it, forget that option and proceed with the next one.
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Understanding fees and charges
It is not uncommon for banks and lenders to have different fees for processing an auto loan. This is something to keep in mind because you must also assume the state and dealer fees to complete the transaction.
Consider the down payment percentage
While the usual percentage for this concept is usually around 10%, there is a possibility that you may need to contribute more. Knowing your budget and what you are willing to pay, look for the alternative that best suits your financial needs.
Analyze payment policies
Before signing any agreement with a bank or lender, you need to know what the fine print says. If for some reason you want to pay off the car loan early or advance payments, you need to find out about the possibility of doing so without incurring a penalty.
Reducing payment time and interest payments can only benefit you.
Find out about additional services
It is normal that some of these companies will guide you through the application process and others will not. In case you do not have much experience, you can accept the help if it is genuine and not a hidden intention. If you don't get the information online, call to clarify any doubts.
Check the Better Business Bureau
The Better Business Bureau (BBB) is the entity in charge of registering complaints or poor service from most U.S. businesses.
To know in detail the reputation of an entity or an online business before signing a multi-year commitment, it doesn't hurt to check it online or by calling the BBB.
Search for online ratings
To find out who you're dealing with, you can check reviews, comments and forums about the entity or company you're interested in. This will give you more details about how it works and help you rule out options that look risky or may be scams.
How to apply for a car loan?
Applying for an auto loan to buy a car involves a series of steps that should be followed to make the process as simple and efficient as possible:
Prequalify for the loan
If you get pre-approved for an auto loan you can lock in an interest rate before you buy your car. This rate is usually held for 30 days, during which time you can compare cars and negotiate with dealers.
Search for your car
Make use of online offers found on sites like Kelley Blue Book or Edmunds to confirm that the car meets your needs along with any lender restrictions on where you're allowed to buy your car.
Compare dealer offers
While interest rates on dealer loans are often slightly higher than other options, it's wise to shop around, especially if you have a pre-approved option that you can use as a basis for getting better deals
Take out the auto loan
Once you've found the right auto loan, confirm the terms with the lender. You'll need to send all the necessary documentation, including proof of insurance, before you sign.
- Sign the loan contract. If you agree to the terms, review and sign the loan contract.
- Obtain the vehicle title and registration. You will need to send the vehicle title to the lender and update the registration to your name. The dealer will usually take care of this, otherwise you will need to do it yourself at your state DMV.
And that's it, from this moment on the car is yours and you can start driving it. Each month you will have to pay the corresponding installments of the loan, either automatically or manually, but do not stop paying to avoid problems.
Beware of car loan advertisements
In the event that the auto loan promotion includes any of the following advantages, we recommend you investigate further to make sure there are no surprises:
- 0% interest financing. This may mean a short term, the impossibility of negotiating the price or not being able to take advantage of rebates.
- No credit check. It could be a scam or a loan to acquire a more expensive car through buy here pay here.
- You can take the car before approval. Possible spot delivery scam, which is characterized by a subsequent call from the salesperson assuring you that you have the go-ahead. It also involves renegotiating the loan at a higher price.
Knowing how to compare several loans to buy a car or any other type of credit can save you money and above all problems. At Busconómico we know this and that's why we put our comparator at your fingertips.
Español: Préstamos personales para comprar un auto