How To Get An Auto Loan

| January 3, 2012

It happens to many of us as we find ourself in need of reliable transportation to take us from point a to point be and the ‘hand me down’ automobile that we once had is just about ready to die. We see all the advertisements on television and the radio and dream about a new car. The problem is we are not sure how we should go about putting ourself in a new car.

The first question that needs to be answered is this, “can we afford the payment” and just as importantly “can we get an auto loan?” There are a few ways to secure an auto loan one is from your family which is rare, the second is from a bank of your choosing and the third is from a finance company attached to the dealership.

Laying the ground work before you set out on a car buying venture will save you a lot of time and embarassment and one important part of that groundwork is coming to grips with your credit rating and score. While it may be too late to change the facts of a bad credit score the knowledge of what your numbers are will help you better understand what your limits will be.

Establishing an auto loan should be just as important as buying a new house with the big question being how much can you really afford to spend and how much of a downpayment or trade in can you put forth. Remember what you know you can afford may not necessarily be the same as what a bank says that you can.

Once you have determined which auto dealer will be lucky enough to gain your business it is time to go shopping. Every dealer wants to sell you a new or used car but in order to get you in that car they may need to work some majic and that may end up costing you higher interest rates and monthly payments. Avoid entering into an auto loan that lasts longer that the car will.

If you are determined to trade in your used car make sure that it is completely paid for because if you still owe on it you will only increase your monthly payments and extend the life of the loan. The most important thing to remember is to educate yourself on the value of you car and the best available interest rates at that time.

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