Determining how much you can afford is the first step in car loan shopping. Once you’ve done that, what happens next? Listed below are the other things you should do to finally get the financing you want.
Contact your bank and/or credit union
Regardless of your credit, you should start shopping for car loans at traditional lenders such as banks and credit unions. You should specifically begin your search with the bank or credit union you have a relationship with. Banks and credit unions offer competitive rates, with the latter having a reputation of offering the lowest rates available. You are more likely to get a good deal from these sources if you have an account with them and choose to repay the loan by automatically drafting money from your account.
You don’t need to visit the bank or credit union to inquire. You can just call. Ask if you can get pre-approved and learn about possible incentives you can take advantage of. Note that pre-approval doesn’t mean guaranteed financing: the lender will only fund the auto purchase if you meet their requirements.
Know what the dealers offer
While getting financing through the dealership may not be ideal, you shouldn’t immediately disregard dealers as a lending option. You never know if dealers have offers worth considering. For instance, dealers here in Seattle have some great deals to offer to those who seek them. Check if they offer zero-percent financing or cash back rebates, and determine if you qualify for them. Discover what rates they have and compare these with those of banks and credit unions. Only after you do comparison shopping can you find the best loan for you.
Prepare the required documents
When you shop for car loans, you need to have the necessary documents ready because these will be requested once you ask for pre-approval and when you actually apply for the loan. The lender will ask for proof of income and proof of residence, among other things. Make sure you have these on hand to make the car loan shopping process easier and faster for you.
Look for your car
After you have been pre-approved or while you are waiting for pre-approval, you can start looking for cars. Before you start though, assess your needs first. Do you simply want a vehicle that can take you from point A to point B? Or are you after specific features? List down your ‘needs’ and start looking for the cars that meet your requirements.
Take time to research about cars—what models are available, what features they have and how much they cost. There are many websites you can use as sources.
Choose your car based on what you need and not what you want. Resist the urge to go beyond your budget just to get a newer, flashier model. What you need is a car, and it doesn’t have to come with more debt than you can handle.
Secure the loan
Once you’ve found a car, you can contact the loan officer of the lender you have chosen and inquire about what you should do to make the purchase. If you took out a car loan from a bank or credit union, you will be bringing over a check to the dealership to buy the vehicle.