Hot Tips for Receiving the Best New Car Loans
Buying a new car with a new loan can be a lot of shopping to tackle all at once. You have to do your research, compare prices, analyze the various features and packages and weigh the cost of each of the options on the menu – and that’s not just true for the car or truck but also for the complicated loan financing. Unfortunately you don’t get to kick the tires on a loan or take one for a test drive, however, so it is important to at least get up under the hood of any new car loan before signing on the dotted line. Otherwise you buy a lemon, thinking you got a sweet deal, and wind up with a sour taste in your mouth despite the new ride in your garage.
Here are three expert tips for receiving the best new car loans:
1.
Get Your Documents in Order before you Apply for a New Car Loan
Getting your ducks in a row – by getting your documents in order – is one of the first things you should do before you start shopping around for a new car loan. Doing so will greatly enhance your chances of a successful loan application, while not having your paperwork in order can cause frustrating delays and even cause you to risk getting turned down for the loan. Your banker can tell you what you’ll need, but the list will probably include copies of your most recent tax return, recent pay stubs from your place of employment, and an overview of your debts – including credit card balances, mortgages, and other car loans that are not yet paid off in full.
2.
Clean up Your Credit Starting Way Ahead of Time
To get the best new car loans – or the best rates and terms on any kind of consumer loan in today’s uptight lending environment and shaky economy – you need to have the best possible credit. Even those with average or below average credit can increase their chances of getting a good loan by taking strategic steps to improve their credit history and pay down their debts before they walk into a lender’s office and fill out the new car loan application. Consult a credit counselor or your banker or lender to find out ways to strengthen your credit in the manner than lenders will scrutinize if you ask for a new car loan, and then take disciplined and proactive measures to raise your FICO score. That will help immensely when you are ready to take out a new car loan and pay for that new SUV, truck, or car.
3.
Check the Loan Up Under the Hood
Just because a dealer tells you a car is a good deal, you do not take their word for it before you have a chance to evaluate it for yourself and give it a drive around the block. The same goes for new car loans. The way to check under the hood or kick the tires on a new car loan is to look at three big components – the APR, the length of the loan, and the charges to process it. The APR or annual percentage rate is the interest rate you will have to pay on the loan, and you want to get the lowest possible APR. These days some people are getting new car loans for as low as five or six percent, and the lower the APR the better. Then go for a shorter term loan because if you have a long loan you will spend many months just paying off the interest and it will be years before you actually pay off the loan and own your new car free and clear. Last but not least get an itemized written list of all other fees and charges related to the loan application and challenge any that seem unjustified or too high.
As complicated as it might seem to pick a good new car loan, there is really no getting around it unless you have enough money in your mattress to pay for the whole purchase in cash. But even if you are like the vast majority of consumers and you do not have a penny to spare, there is no reason to lose sleep over it. Just follow these three basic tips for getting the best deal on a new car loan and you can rest easy, assured that you did your homework and can reap the rewards of a wise consumer decision.
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