Auto financing can be an excellent way to buy a vehicle, but it doesn’t come without risks or concerns. Whatever financing option you choose, it’s essential to research your options beforehand to make the right decision. Here’s an easy guide on car loans.
What Are Car Loans?
A car loan is a way to buy a car using financial aid. A loan is taken to buy a vehicle, and you must make payments to repay the loan. You must agree to repay the total amount borrowed plus interest and fees. Making payments on time can mean a higher likelihood of approval for future loans with a lower interest rate. A poor score doesn’t disqualify you from being approved, but it can cause you to pay higher interest.
Find out Your Credit Score
Knowing your score is important because it’s not just a measure of your financial health but also a predictor of future money woes. Free online sites let you assess your credit score and track your credit info with the major credit bureaus, Experian, Equifax, and TransUnion. You could also access a free annual credit report from authorized websites by the US government.
Pre-Qualify for A Loan
Pre-qualification includes inputting some basic financial information about yourself to get an idea of how much you can borrow. This can help make the process more stress-free when shopping for a car. It takes a few minutes or less and is secure.
Shop for Your Car
You can shop for cars in person or online. Online sites allow you to look up dealerships and contact them to get info based on what you need. Some sites have services to help you find your dream car by providing info about dealer inventory or helping you search for a vehicle you can test drive. Once you’re happy with your decision and want to move forward, you can apply for a loan.
Make Payments on Time
With your auto loan closed, you’re all set to go. But remember to make your payments on time. Now, you can easily set up automatic payments through your bank, eliminating the need for loose checks and manual tracking. This helps build a history of on-time payments that could help improve your credit score and ability to get a loan.
