There is nothing more exciting than buying your own car for the first time. However, this is obviously very costly, which is why banks offer loans. For first timers this can be a very overwhelming process. Thankfully, if you follow the steps outlined below, getting a car loan can be smooth and simple ordeal.
Take a Look At Your Credit
In order to get approved for a car loan, you must have a good credit rating. This will also play a role in how much money you’re expected to pay on your loans every month. For instance, if you have a high credit score, you’ll be afforded a low car loan rate. This means you’ll ultimately be able to save money on interest. On the other hand, if you have a low credit rating, you’ll end up with a high car loan rate accompanied by a high interest, costing you more money in the long run. Your credit score is determined by your credit reports, so it is crucial that these scores are updated and accurate.
Decide How You’re Going to Make Your Payments
To make sure that you don’t end up in debt, it is up to you to decide just how much money you can afford to spend every month on a car payment. You don’t want to set up these payments so high that you end up falling behind on what’s due, but at the same time you don’t want to make them too low where the interest keeps accumulating. Once you’ve figured out how much you can realistically spend monthly on these payments, it’s time to choose if you want a 3, 4, 5 or 6-year term. If you pick a longer term, your monthly payment will be lower but you’ll actually end up paying more than the vehicle is worth in the end. Remember, though, with buying a car you’ll also have to pay insurance and maintenance costs along the way. This should be kept in mind when deciding what kind of term you want for your loan.
If you do qualify for a loan, you will be given a pre-approval, which will last you up to a certain amount of time and money. Of course you’re allowed to spend less than the amount you were given in the pre-approval, but you cannot spend more. If you do, you will have to pay the difference in cash. However, if the vehicle ends up costing less than the amount of money you were afforded, you won’t get any money back, but instead a smaller loan.
Finalize the Deal
After getting pre-approved, it’s now time to choose the car of your dreams. The great thing here, though, is that instead of having to negotiate with dealers to get your financing rate down, all you have to worry about is getting the best price for you car. Then, once you pick which car you want, it’s up to the financing department at the dealer to work with the lender to finalize the sale. They may try to get you to buy further add-ons like extended warranty or fabric protection, but that is completely up to you. As soon as the sale is all settled, you will receive information on the payment schedule for your car loan. You can either pay these payments through the mail, at your local bank or through online services.
When it comes to owning a car, there are so many different aspects to think about. From insurance to warranties, this can be a stressful process. However, getting a car loan from the bank doesn’t have to be.