When buying a car, you may plan to borrow money. While it is best to pay money for your car, if you are going to borrow money to buy a car, it is important that you shop for the best possible loan. Many people automatically assume that you only do it at a dealership, but you can often find better rates by looking around. Some people plan to transfer their old loan into their new one, but this is a bad idea.
Determine how much you can spend
When you determine that you want to buy a car, you should determine how much you can afford to buy. Ideally, you should be able to pay off the car in three years. It gives you some economic stability. You can qualify for more money, but that doesn’t mean you should borrow more money. You do not want to deal with the fact that you cannot afford to pay for a car because of a change in finances. It is better to be very conservative as much as you choose to spend on a car.
Call your local banks and credit unions to find the best price
Call your local credit union and see if they will approve your loan in advance. You can also contact your current bank. These institutions will offer lower interest if you have an automatic payment from your account. One should ask about these and any other discounts they can offer. It is important to take the time to call a few places.
Your credit union is likely to have the lowest rate. You can compare rates with concession rates and choose the best deal. You should look at all the possible ways to save on your loan, such as setting up an automatic payment or switching banks to qualify for a lower rate.
Prepare to provide your financial information
During the pre-approval process, you may be asked to provide your current source of income and proof of the amount you are currently making.
If you do not need to do this to obtain prior approval, you should be prepared to do so at the time the loan is signed. Some companies are very strict in this procedure and others are not. If you do not qualify for a car loan, you must save and buy a car with cash. This can limit your options when you buy a car.
Start shopping for a car
Once you have been approved for a certain amount, you need to find your car. You can actually start looking at the same time. When buying a car, it is better to sell your old car before doing the trade. In addition, you should not transfer your current credit to your new one. This will make you upside down on your car which means you will owe more than it is worth. Take the time to look for the best car available. Don’t be afraid to negotiate a lower price. When you have your own financing, you may be able to get a better price because an authorized agent cannot discount the price in financing.
Complete the loan process with your bank or credit union
When you find your car, you need to speak with your loan officer who will let you know what you need to do to buy a car. Often this will involve you checking the dealers.
The dealership will sign your name with a note on the lien. Then, when you change the name of the car in your name, it will be sent to your bank or credit union address. When you pay for your car, you get the title.