If you are in the market for a new car, financing is not always that easy. But you can easily make the procedure less difficult, if you comprehend the various processes involved.
I outlined 6 detailed process on how to get an auto loan in this blog post which you should not be afraid to try out!
How to Get An Auto Loan Processes;
If you comprehensively know the different steps involved in getting an auto loan, the financing process will be less intimidating and much more easier.
This are the steps involved;
1. CHECK YOUR CREDIT REPORT;
The first step in getting approved for an auto loan is to check your credit report for errors. If you have a low credit score, you can be denied of an auto loan approval, this can be caused by mistakes like duplicate accounts, missing payment history or misspelled names.
A credit score can be obtained from your bank free of charge. It is usually updated on a monthly basis.
Steps to Check and Evaluate Your Credit Report..
I. Evaluate Your Credit Report: Your credit report contains every account you’ve had in the past 6-10years, including payment history, how much you owe and if you’ve been sued or declared bankrupt.It is more detailed than your credit score.
Credit reports come from the three major credit bureaus: Equifax, Experian and TransUnion. You can typically check these reports freely annually, but you can also currently pull them on a weekly basis for free using AnnualCreditReport.com.
III. Check For Errors: Check for errors like accounts that are listed as paid off when they aren’t, or late payments that were reported incorrectly etc… All these can affect your credit score, so check your report very well to ensure that everything is correct.
Be sure any changes are requested 30 days or more before you apply. It can take up to the full 30 days to act on your request.
iv. Do Not Open New Account: It is better you hold off on opening additional accounts until after your auto loan approval because opening a new credit account will lower your credit score temporarily.
v. Limited Your Credit Card Use: Stick with cash payments and avoid adding to any revolving credit balances because a high credit card balance can significantly affect your credit score.
2. DETERMINE YOUR AUTO LOAN BUDGET;
Firstly ask yourself how much car you can afford with the sole mindset that buying a car can be a major investment..Then think about the answer based on your budget and your ability to repay the loan.
Consider these three steps whole trying to answer the question…
I. Your Current Financial Outlook: First and Foremost, look into your current earnings and how you will likely remain with your current field of work. Then go ahead if you have a big change ahead.
Ii. Full cost of ownership: Consider the full cost of ownership which are in form of maintenance, fuel and insurance costs that you will incur.
Iii. Examine other Costs: Lastly, understand what your costs outside the car looks like then keep a budget i.e other debt payments in order to make a financially sound decision.
3. APPLY FOR AUTO LOAN PRE-APPROVAL;
This is a great way to know exactly how much you will be able to borrow. You can also reach an agreement by negotiating as if you were buying with cash once you get to the dealership.
You can get the preapproval process done before going to the dealership. In fact, there is a high possibility that you will be offered a high rate than the preapproved rate when you step into the dealership’s financing office. This is so because dealerships add a commission to any rates offered by the lenders they work with for their own extra gain.
So It’s recommended that you apply for preapproval with at least three lenders to ensure you’re getting the best deal.
4.SHOP FOR YOUR CAR
Here you shop around for the car you need. Look up for different vehicles that suit your needs and go to car dealerships to test drive them. Communicate with salespeople and compare your options to understand what’s out there, just keep your total buying capacity close to the heart, as to negotiate.
But, don’t forget to do research before you step into the dealership’s lot, check out sites like Edmunds, compare different vehicles and how much they’ll cost based on make, model, trim and even your location.
If you want to buy a used car check out online services like Carvana and Vroom. You may get a better deal than you would with a dealership.
5. FINALIZE THE AUTO LOAN
This is the final step in getting auto loan approval, once you have found the right auto loan, you will have to confirm the terms of the loan. You may be required by the lender to send in any required documents like including proof of insurance, before you sign the documents.
Once you have agreed to the loan terms, sign the auto loan documents. If you have a co-signer, that person should also sign the auto loan documents. If you have an auto loan from the dealer, the dealer will provide the auto loan contract with the lender’s contact information.
Get the vehicle title and registration. You must have your vehicle title sent to the lender and the vehicle’s registration updated to your name, the dealership will usually take care of this if you’re buying from one.
After you get the auto loan and complete the sale, you can now take possession of the vehicle.
6. PAY AS FAST AS POSSIBLE
you don’t just stop after your auto loan is locked in, you will have to make on-time car loan payments . Your lender will most likely provide online access to your loan information, where you can set up automatic payments. Then you are all set!
HOW TO GET AN AUTO LOAN; Try These Steps to Increase Your Chances of Approval…
Have u be denied auto loan approval before, but now you need a car loan immediately, consider these options..
Find a Cosigner; By Cosigning, the Consigner agrees to pay back the loan for you if you default or they take a big hit to their credit score. So the first thing you will do to get an auto loan now is to ask someone you trust and who trusts you, who has good credit to cosign the bad credit auto loan for you.
Consider buying a Car for Cash
Used cars are not that expensive compared to new ones and you may likely buy one for the same amount you’d put down on a new car..
If you wants to buy the used car, buy from a private seller, not a dealer. Used cars sold by private sellers are typically less expensive than those sold by dealers and can be financed with cash or a private party auto loan.
Use a Personal Loan:
Some personal loans don’t require strong credit and may be used to purchase a car. But rates could be as high — or higher — than a bad-credit auto loan.
How To o Get An Auto Loan With Bad Credit
First likely know your exact credit score, Yes you know that your credit score is in the poor range, but they can change within days or even hours, so it’s helpful you look up your score to know exactly where you stand before applying for an auto loan
Secondly, If your score appears very low, make sure there are no errors on your credit report, which can be checked at AnnualCreditReport.com.
Lastly, Bad credit loans are expensive, therefore apply to multiple lender directly, shop around and compare don’t just take the first two offers you see.Any applications you fill out within a two-week window will count as only one hard inquiry on your credit report.
Understand auto loan very well before applying because when you’re in the market for a new car the financing process can be very expressive. And if you’re not sure how much you can afford, check your credit score before you visit the dealership.
This blog post was detailed to help you in trying to get an auto loan, apply the steps and don’t forget to comment if you got any challenge, I will be glad to help you if u encounter any challenge..