When you're in the market for a new or used car, one of the most important things to consider is how you will pay for it. Unless you have a generous friend or family member who's willing to help out, your best bet is usually an auto loan.
But qualifying for an auto loan can be tricky, especially if you don't have a perfect credit score. So what are the best ways to make sure you get approved? Read on for some helpful tips!
Check Your Credit Score and Credit History
Checking your credit score and history will give you a good idea of where you stand in terms of your creditworthiness. If you have a good credit score, you're more likely to be approved for a loan with favorable terms.
If you have a poor credit score, on the other hand, you may still be able to get a loan, but it will likely have less favorable terms. For example, you may end up with a higher interest rate or a smaller loan amount. Lenders typically view borrowers with poor credit as higher-risk borrowers.
Either way, it's important to know where you stand before you start shopping for an auto loan. That way, you can be prepared for what to expect from the terms of your loan.
Have A Down Payment Saved Up
A down payment shows that you're invested in the purchase of the car, and it can help lower the overall amount you need to finance. A sizeable down payment can also help you negotiate for a lower interest rate on your loan. It signals to the lender that you're less of a risk because you have skin in the game.
Ideally, you should aim for a down payment of 20% of the car's value. But if you can't swing that, don't worry –– as long as you have a down payment of some sort, you should still be able to qualify for an auto loan.
Saving up for a down payment can take some time, so don't rush into getting a loan if you're not quite there yet. Wait until you have a decent amount saved up to get the best terms possible.
If you don't have time to save for a down payment, you could still qualify for a loan but pay more in interest. Speak with a loan officer to see what your options are and find out if you can get pre-approved for a loan.
Reach out to a company like Premier Financial Credit Union to learn more.