The first thing you need to do to get an auto loan is to gather information. So that you can compare the terms and interest rates that will be offered to you, you need to know what is usually offered to people with your credit score. So, you need to get copies of your credit report from Equifax, Trans Union, and Experian, the three main credit reporting agencies.
When you get your credit report, look it over carefully to see if there are any mistakes. If you find mistakes, you should challenge them right away in a formal way. If you still owe money, pay as much of it off as you can before applying for an auto loan. If you have a lot of credit accounts, you might want to pay off the ones you don't use often and close them. Some creditors might be scared off by the idea that you could quickly get a lot of credit debt on top of an auto loan, which could hurt the rates and terms they offer.
It's a good idea to be ready when you go to a dealership. Besides knowing your credit score, you should also know what kinds of loan rates you can usually get. This can be done by going to one of the many websites that offer free quotes on interest rates. If a dealer gives you an offer where the rates are very different, you should ask questions. Be careful, because it could be a sign of a shady dealer.
If you can, take your time when looking for a car loan. Compare different offers and make sure you understand everything. Ask how much the loan will cost you in total, how much interest you will have to pay each year, how long it will take to pay it off, and how much each payment plan, including interest, will cost in the end. Check to see if there are any fees if you pay off the loan early. Check twice to make sure you understand all of the loan fees.
What you want is simple: auto loans with a low interest rate, a fair and comfortable schedule for paying them back, and no nasty surprises in the fine print. Don't let want or pressure get in the way of what your credit history and financial situation require.
Even if your credit history isn't great, you don't have to take out loans that are bad for you. Slow down. Do what you can to fix your credit as much as possible. Part of that is making yourself look good and reliable, in addition to the obvious steps of getting rid of as much debt as possible and closing credit accounts you don't need. Before you apply for a loan, you must have lived at the same address and worked at the same job for at least six months. Do not apply for credit that you do not need, and if at all possible, do not let potential landlords, employers, etc. look at your credit report. All of those requests, which will show up on your credit report, can make it look like you keep getting turned down for credit. You don't want that to happen.
Don't let yourself be rushed into a loan for people with bad credit as a last resort. Even if you've made mistakes with your credit in the past, that doesn't mean you have to take any terms and rates. With hard work and time, and especially if you keep trying to fix your credit, you will find terms and rates that work for your finances.
Planning and knowing what you need to know can make a big difference in the kind of auto loan you get. If you do your research, know what you're willing to accept, and are willing to stick to your decision, even if it takes a little longer, you'll probably find the right auto loan for you.
