Car Loan Tips

Repair Your Credit

Before going shopping for a car, your credit should be in the best condition possible. If you're the type of person who always takes very good care of their credit and pays all bills on time, this shouldn't be a problem. However, if you have a few recent late payments or collections on your account, you may want to get your credit score pulled from the reporting agencies and clear up some of those collections before approaching a bank for a loan. Even a difference of 10 points in your credit score can mean a world of difference in interest and payments.

Get the largest down-payment possible

The more you go in with, the lower your payment and the lower your interest rate may be as well since you present a smaller risk to the lending agency. Your down-payment should be expressed in terms of a cash or credit card transaction that you can make at the sale, not just your trade in. Even if you can only increase the down-payment by $50, you can save yourself more than $100 in interest over the life of a 5 year loan. Lending institutions will take the size of your down-payment versus the car cost into consideration when deciding your loan terms.

Check with credit unions for deals

Local credit unions are more likely to offer special deals or discounts in order to entice people to get their car loan through them. They tend to be more focused on local borrowers and deals and without all of the national needs and advertising expense of the larger banks, they can afford to take greater risks with their borrowers and present larger incentives. If you don't belong to a credit union, speak with a car-consultant about joining one in your area to see what their offerings are. If you have questions you are unclear about so far, be sure to see if they are answered in the frequently asked questions.