When shopping for your next used vehicle, there are certainly a variety of different aspects of the purchase to consider. Now that you’ve narrowed your search down to a certain model and determined your budget, it’s probably time to start thinking about how to get the best finance rate on a used car. Whether it’s your first time shopping for a used car or you’re experienced with the process – there are a number of steps you can take in order to get the best rate on a used car. Our team at the Schumacher Auto Group has assembled this guide to help you find the financing rate that’s a perfect fit for your situation.
Tip #1 – Know Your Credit Score
It’s no secret that your credit score and credit history play a big role in determining the type of financing you’ll qualify for. Simply put, the higher your credit score, the lower your rate. Used car shoppers can take advantage of a number of different methods available online to check their credit scores. It’s also a smart idea to continually monitor your credit score in order to ensure things look good to a potential lender. Paying down existing debt, paying your monthly bills on time, and reducing the number of additional credit applications are three simple steps you can take to improve your credit. After all, a higher credit score means that you’ll pay less for your auto loan!
Tip # 2 – Research Your Rate
There are a number of resources available to you online where you can shop for and compare auto loans. A great first step is to use a car finance calculator to determine the type of finance program that’s right for your individual needs. You can also research specific lenders to identify the companies that offer services that suit your situation. Make sure you compare aspects like the interest rates themselves, repayment policies, and any potential penalties related to the auto loan. You’ll also be able to find recent reviews for many of the loan companies that you’re considering.
Tip #3 – Compare Total Loan Amounts, Not Monthly Payments
A common tactic for unscrupulous lenders is to make your monthly payment look as low as possible by stretching out the repayment period and making the loan look more attractive. Falling for this trap can mean borrowing more than you initially intended and requires you to pay more in interest over the entire term of the loan. When shopping for loans, make sure you’re comparing total loan amounts to avoid any unexpected surprises.
Tip #4 – Apply for Loans Within a Two-Week Period
A hard credit inquiry is generated each time that you apply for a loan. The good news is that the current FICO credit scoring model allows for all new loan applications made within a two-week period to be treated as a single inquiry. This is known as “rate shopping” and typically won’t have a negative impact on your credit score. Many lenders also allow you to get prequalified on their websites in order to give you an estimate of possible loan offers, interest rates, and payments without pulling your credit. Getting pre-qualified is a great way to get a clear picture of how much you’ll likely be approved for once your application is formally submitted.
Tip #5 – Examine the Fine Print
Now that you’ve received your quote, make sure to read the fine print thoroughly. Since an auto loan is a binding agreement that will follow you for years, it’s essential that you understand the details. Make sure you examine the terms and conditions to look for things like loan processing costs, prepayment penalties, and other fees that the lender may charge. The last thing you want is a huge surprise when it comes time to make your first car payment.
Visit the Loan Experts at Schumacher
At the Schumacher Auto Group, we believe that an auto loan shouldn’t be the only thing standing between you and your next used car. While each situation is different, our team is standing by to provide a solution that suits your own individual budget requirements. Even if you have bad credit or limited credit history, we have programs to help! Visit us today and let our team find an auto loan that’s perfect for your budget.