There are many ways to try to get the best deal on auto financing, which most people call "car loans." But when they look for car loans, most buyers make two of the biggest mistakes you can make when buying a new car. The first is trying to buy a new car without checking online to see what the rates are for car loans. The second is getting a car loan without checking their credit history to see if they can afford it. People who get their car loan from the dealer are the most likely to make mistakes. If you remember a few tips, you can avoid making these kinds of mistakes.
Rule #1: Don't trade in a new car if you still owe money on it.
Refinancing is without a doubt a good way to save money. The dealer will often suggest that, instead of taking money out of your savings to pay for a new car loan, you sell the remaining payments on your old car loan to the new dealer and let them pay for it. This sounds like it's too good to be true.
Then, after trading in a car on which they still owed money and getting a loan for a new car, these people often find out two months later that the new car dealer hasn't paid off the loan on the old car in ten days as promised. So, when the bank calls, they still have to make the payment because their name is on the old car loan. Dealers who aren't honest often do this to save money, which means the customer ends up paying more for the trade.
If a buyer really wants to do this, they should make sure the dealer writes down when they'll pay off the car loan and how much they'll pay. This makes it harder for a dishonest salesman to take advantage of the buyer.
Loan rates and credit scores
Everyone knows that credit scores have a big impact on the rates of any loan, including car loans. Most of the time, people with bad credit pay more for auto loan interest rates. So, if you want to get the best deal, you should get a credit report with a credit score. Several websites, like Equifax, Experian, and TrueCredit, let you do this online. If your credit score is less than 550, you may have to pay more for your new car loan unless you get a bad credit auto loan. Credit can be improved over time by making payments on time and closing accounts that aren't being used. This can lead to better loan rates.
