Whether you have gotten a dozen car loans in the past or you are out shopping for your first car, there are several important steps to take prior to applying for your loan. Some of these things will dictate whether you are able to get a loan at all while others will simply determine what you can qualify for and what your interest rate will be.
The first thing you can do is to make sure your credit report is in order. You can obtain a low-cost or free copy of your credit report online, and then analyze it and determine whether there are any discrepancies. You will want to do this as soon as possible when you know you want to buy a car, as the process of fixing any errors on your credit report can be long.
Second, you need to be realistic about what you will be able to spend. Keep track of your income and expenses for a couple months and then see how much is left over for a car payment. Many lenders and dealerships will try to tell you how much you can afford, but this is unreliable, as nobody knows your finances as well as you do.
Third, when establishing your budget and when you are out shopping for cars and car loans, keep in mind that the cost of the car is not the only deciding factor. You will also want to consider the costs of repairing your car. Your interest rate will also drive up or down the total amount that you will end up paying over the life of your loan. Some cars are more expensive to maintain than others are, so this is another factor you need to think about.
When you are out shopping for car loans, it is important that you remain realistic about what you can afford, as well as make sure that you are taking care of your credit. Finding the right loan and vehicle for you can be easy with a little preparation ahead of time.