Car loans are a critical part of the car-buying process. They provide you with the money to buy a car, and they also help to protect you from costly late payments. Here are some ways to make the process smooth and stress-free:
Getting Preapproved for a Loan
Whether you’re buying a new or used car, it’s smart to get preapproved for your loan before you go shopping. Then, you can compare the terms of different lenders and find a car that fits your budget.
You can apply for preapproval with banks, credit unions or online lenders. Once you’re approved, the lender will give you a quote on the size of your loan and interest rate it’s likely to offer.
Shop for Your Car
Once you have a loan offer in hand, it’s time to start looking for your next car. Use the numbers you’ve been given — including your interest rate, monthly payment and amount owed — to inform your comparison shopping. You may want to consider a longer loan term to reduce your monthly payments or a smaller down payment to save on interest.
Trade-In or Sell Your Own Vehicle
Before you head to the dealership, check how much your trade-in vehicle is worth. You might be able to use that as a down payment or as an incentive to negotiate a better price on your next car. If you don’t have a trade-in, think about selling your vehicle privately to reduce the total amount you owe.
Don’t forget to factor in any possible add-ons that might be offered during your car-buying experience, such as extended warranty, oil changes or gas. These are often included as part of the price of the vehicle, but you can easily avoid them if you don’t finance through a dealer.