Fewer purchases rank more highly in life than purchasing a vehicle. However, very few of us walk around with enough cash to pay for cars in full. Fortunately, vehicle loans can help future drivers acquire the rides of their dreams. But first, there are three things one should know before applying for an auto loan.
Be Aware of Your Credit Score
Your credit score is the top factor that establishes your ability to qualify for a loan, interest rate, loan amount, and monthly payments. Knowing your credit score before you get a car loan can help you determine your eligibility for different loans. It’s also worth noting that not all lenders utilize the same criteria to determine your eligibility, so remember to pay extra attention to all the requirements.
Finance What You Can Afford
You’ll also want to look into potential monthly payments. A longer-term loan with lower monthly installments may appeal to you, but if interest rates are high, you’ll end up paying much more throughout the term of the loan. Consider a shorter-term loan with higher monthly payments—this will save you money in the long run.
That said, you don’t want to acquire a loan that requires you to pay more than you can afford each month. Securing a loan you can’t afford can result in an auto repossession and hurt your credit score.
Have Your Down Payment Ready
Lastly, it helps to have a down payment readily available, plus an extra monthly loan payment to cover your bases. If you have a lower credit score, you can provide a higher down payment to avoid a loan rejection.
To avoid overpaying for your new vehicle, it helps to know these three things when you’re applying for an auto loan. Planning is crucial at this stage, so contact us at Superior Financial. Most of the time, we offer same-day decisions that can help you get in front of the wheel more quickly.