Your old car broke down and needs to be replaced, or maybe you decided that it is time for an upgrade to a newer model. You might have the cash on hand, but if not, you are going to need a loan to cover the cost of the car. How does one go about getting a car loan?
The biggest thing you need to worry about is your credit score. The higher your score, the better chance you have to score a loan at a lower interest rate. You can check your credit score for free through various sources, and have your loan approved online before you even get to the dealership. You can expect an interest rate of anywhere between 3-6 percent on average.
Choose Your Lender
You can get financed by the dealer, a bank that that the dealer works with, or go to your own bank or credit union. The goal is to get the best deal possible. You want the highest loan amount you can afford with the lowest interest rate. It is often easier to get a loan if you have down payment, or a trade in.
Length Of Loan Makes A Difference
Most lenders are going to give lower interest rates on shorter car loans. This is because the lender will see their money back faster. Longer loans tend to have higher interest rates and cost more in the long term. The average loan for a car is 60 months, but they can be longer or shorter depending on your needs, or incentives given. Your lender may also impose restrictions on the length of your loan depending on your credit history.
Once you have your credit score, found a lender that is willing to to loan you the money and have signed the paperwork, you are free to drive off in your new car.