Your old car has started to act up on you. Most days, you can’t even get it to crank long enough to get yourself to work. It’s time to trade this clunker in for a new model.
Most people can’t walk into the dealership with a wad of cash in their hands. They need to go through a bank to get a loan.
If this is your situation, there are a few car questions you need to ask before you sign on any dotted lines.
Check out this guide to figure what companies have the best loan rates and learn what you should ask to get a good deal.
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Things to Know Before Applying for Car Loans
There are a few things to know about car loans before you start applying. How much you can get is mostly dependent on your credit score, you should try to get approved before you go shopping, and you shouldn’t rule out dealership financing.
Your Credit Score
Your credit score is how most loan companies decide whether or not they trust you enough to give you money. Note that not all companies weigh your score the same.
Some only care if you have a steady income and no repossessions, for example. They don’t weigh your actual score quite as heavily. You’ll need to do some research before you start looking for auto loans and figure out your credit score to learn where to apply.
Get Pre-Approved Before You Shop
It’s always a good idea to get pre-approved for a loan before you go shopping around. Having a piece of paper in your hand or a check makes you a cash buyer.
It will increase your bargaining chip by a lot once you get to the dealership.
Dealership Financing
You might be able to get financing through the car dealership. Seeing that amazing loan rate on paper is tempting. The problem is that your credit score and car history will be weighed a lot more heavily.
There’s a good chance that you won’t qualify for this deal. You shouldn’t go into the dealership banking on it.
Car Loan Questions to Ask
Now that you know what to look out for before applying, it’s time to ask the real questions. Don’t sign on any dotted line until the lender answers these queries.
What’s the Actual Rate?
Always make sure that the number the lender gives you is your actual rate. You don’t want to deal with any surprise fees later on down the line when it’s time to make your first payment.
Knowing the full rate can also help you compare different car loan providers. Remember, simply getting a quote doesn’t lock you into a deal. You can get rates from multiple companies.
Can You Provide Me With All Auto Loan Details?
When you find a company that you like, read all the paperwork before you agree to anything. You need to know if you could suffer any penalties for refinancing your vehicle or paying it off ahead of time.
The full amount you have to pay each month should be on the paperwork along with your interest rate and how long your loan will take to pay off.
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Does the Deal Include Credit Insurance?
Many lenders will try to slip credit insurance into the deal on the sly. This isn’t a bad thing, but it doesn’t always help you either. You’ll want to talk to an insurance agent to find out if you should go through with it.
Best Loan Lenders
When it comes time to get your loan, you can either go through a bank or a lending company for your needs. Here are three companies that you should start your search with.
PenFed Credit Union
First up on the list is PenFed Credit Union. They have decent rates with tons of options available if you’re a member. If you have limited income, PenFed should work with you.
They’re pretty flexible in that regard. The only setback is that you have to be a member to get a loan. This isn’t a problem for some, but it can be a deal-breaker.
If you want to take advantage of their lowest rates, you’re going to need a killer credit score. Once you’re approved, you can receive anywhere between 500 and 100,000 dollars for your loan.
LightStream
With LightStream, it’s easy to go apply for a loan online. The thing is, it’s only online. If you don’t have a connection, you’ll have to go through the trouble of parking at a McDonald’s somewhere.
They don’t have many restrictions when it comes to what kind of car they will finance. The interest rate isn’t horrible, and you can get an unsecured loan if your credit score is good enough.
Bank of America
Bank of America is a well-known institution, so you shouldn’t run into any shadiness. They offer low rates and they have plenty of loan options for you to choose from.
Once you apply, you won’t have to wait too long to get an answer, and they are transparent with you from start to finish. They do have restrictions when it comes to what vehicles they will finance, however.
Car Questions to Ask When You’re Getting a Loan
Chances are when you’re looking for a new car, you don’t have a lot of cash to throw at it out of pocket. You’ll have to get a loan. There are car questions that you’ll need to ask before you go through any lender.
Take the time to compare rates before you commit. This is the best way to get the great deal that you’re looking for.
Are you searching for ways to pay for your new car that doesn’t involve taking out a loan? Check out the Finance section of our blog to learn more.