When you are considering the purchase of a brand new automobile it is important to take into consideration the type of financing options you are eligible for. So often, consumers go to the dealership and when they have settled on the new vehicle that they want, they simply take the first financing offer that is made. There is little doubt that it is not likely to be the best offer that they can secure. In order to find the best possible financing deals on new car loans, there are a few things that you need to be aware of. This guide is prepared to direct you in the ways of finding the best deals on new car loans.
Before you set foot on the dealership lot, you can apply for pre-approved financing from a number of lenders who are willing to offer competitive rates. Of course, the rates that you are offered will depend upon your credit history, cumulative credit scores, your income, and your debt to income ratio. This is known as your creditworthiness. It is always a good idea to check on your credit scores with the three most commonly used credit reporting agencies. Obtain a copy of your cumulative credit report an check it for inaccuracies. Often, credit scores are lowered because of inaccuracies that are recorded. If you find an issue, you can request to have corrections made. If there are extenuating circumstances such as divorce, death or unemployment due to disability for a period of time, there is room for an explanation on the report and this can make a difference with some lenders, providing that the remainder of the report is positive.
Pre-approval for new car loans
There is a variety of different lenders who are willing to extend credit on new car loans. One of the fastest and easiest ways to compare their rates, terms and policies is to use convenient online tools that help you to accomplish this. Just plug in your personal data and the results are returned to you within a few minutes so you can get an idea of which lender is apt to offer you the best deal with the lowest interest rates. Before accepting any offers, you should carefully read about the terms and conditions of the contract. Avoid variable interest rates which can be changed after your loan has been approved, and penalties for pre-payment. The latter is more important if you think that you may wish to pay the car off early, or if you anticipate trading it in on a newer vehicle before the total amount is paid off.
According to ThoroughlyReviewed – Car Warranty Reviews section, the most pre-approval processes can be completed online and can be accomplished quicker than standing in line at your financial institution and wading through copious amounts of paperwork, questions and required documentation. Electronic applications may be completed with the use up uploading files and documents for transmission in some cases.
Your financial institution as an option
Not all banks make their customers jump through the hoops. If you have a good history with your current bank or financial institution and a good credit history, you may be eligible for a faster turn around time for securing your new auto loan. Some banks even sponsor specials on this type of loan in promotional efforts to generate new business. It’s always worth your time to ask.
The value of pre-approval
There is an additional value to having pre-approval for a new car loan. When you decide upon a vehicle, you will know the amount of the financing that is available for the purchase. This gives you an additional bargaining chip in your pocket for negotiating the best price from the dealer. This is especially the case when new car sales are low and the dealership is trying to move out some of the older new models of autos to make room for the new ones which will be coming in soon.
Less time spent waiting for financing approval
Most of us who have purchased new vehicles from the dealership understand how long the financing portion can take. After your financial information is input into the system, the salesperson will come back with several different offers, usually not what you had previously agreed to, and usually much higher. In some cases, this is due to the fact that most dealerships will add and additional one to two percent to the lender’s original offer to pay for their services. This is not widely advertised among consumers, but it does happen on a frequent basis. The process can take between two and six hours and amounts to a tremendous waste of time as the negotiations drag on. When you have your financing already in order, there is no need to spend time haggling and negotiating with a sales manager who has already approved the sale price of the car to get you into the office.
Knowledge brings power
When you know how to go about it, finding the best possible financing options for buying a new car can be done fairly quickly and easily. In addition, with a little effort and patience, you will be able to compare offers from a variety of lenders who are willing to offer competitive rates and terms, which means you have a good chance of saving money by not choosing to go with the first offer. Gaining pre-approved financing before you begin negotiating with the dealership on a new car provides you with more leverage in getting a better deal. It can also eliminate the need for spending hours haggling over financial details and price increases that you may not be prepared to pay.
By following the steps and recommendations made within this guide, you have the knowledge that you need to go out and find the best deals on new car financing. Instead of hoping to get a good rate from the dealership, you will know precisely how much you are going to need to pay for the new car loan that you have already secured through another source.