Before even visiting a dealer’s show room or browsing the Internet for the type of car you want to buy it is important to figure out the most comfortable budget amount you can direct towards a car payment. While it is best to keep your repayment period as short as possible, you must also consider the amount of money that could reasonably be spent on the payment each month. This is the only way to find the best new car loan for your needs.
It helps to understand that the financing offices at most dealerships, and many lenders as well, will look first at your credit history, and will not necessarily shape the loan to your best interests. For example, most banks and traditional lenders like to see loan requests at 36 to 48 months in total. These are the loans that get the better or lowest interest rates, but they will also offer potential borrowers much lengthier loans with lower monthly payments. Why? In the end such a loan will bump up the total price of the car and bring in a much higher amount of interest.
This means that having a realistic budget figure is an essential element in getting the best new car loan. The next part of the process is identifying the lenders offering the best terms for your needs. Remember, the lenders will want to know your credit history and credit score, and this means that you should know them too. This will save you a lot of time and effort and will prevent you from approaching lenders that will decline you based on the information in the reports.
For example, you might find that you have only a “fair” credit rating that can only be improved over time, and this will mean that you should include the “bad credit” auto lenders in your list of resources. This is because they can often structure the best new car loan for someone with a poor or shaky credit history. This is the type of loan that has a better rate of interest and a more acceptable repayment period.
Only by doing a bit of preparation and some research can a consumer adequately prepare for the loan searching process. It is important to accept that the credit history is going to really direct the final outcome, but shopping around and knowing some financial “basics” can often help you to get the best new car loan possible.