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How to get auto financing and how to save on it

Buying a car is a dream for almost every person. However, buying it by paying hard cash from own pocket is possible for only a few people. Most of the car buyers get the help of auto financing to purchase a car, but they require paying some money upfront as down payment. Taking out a car loan from a bank, a car dealer, an online auto loan provider or a community credit union is the most legitimate and perhaps the only option to buy a car, especially for the people from low and middle income groups. If you’re planning to buy a new car, make sure your chosen auto lender offers you the best loan options and the most competitive base price for your car. Nevertheless, before everything you must check if you’re at all eligible for getting auto financing.

Tips to get auto financing

You can purchase your dream car by taking out an auto loan, but it may not be possible, if you have to pay for it outright. Paying thousands of dollars upfront to buy a car is not a matter of joke. Thereby, the need to auto financing comes into play. If you’re a first time car buyer, here are some tips that would help you get you loan application processed easily and quickly.

  • Know your credit status – It is very important that you know your present credit status. Unless you know your credit status as well as FICO score, you may not be able to avoid paying higher interest rates charged by the lenders. If you have a good credit rating and a good FICO score, the lenders are more likely to offer you lower interest rates than what they charge to the customers with poor credit. However, if your credit score is low, then your auto financing application may be declined by the traditional lenders as they don’t prefer to offer loan to the high-risk borrowers. Under such circumstances, you may opt for online car financing companies or car dealers.

  • Gather all data and documents – Collect all required data and documents before you apply for the loan. Also keep the money that you will pay as down payment ready. Unless you keep all the documents and money ready, your loan application would take longer to process.

  • Choose the car – Now it’s time to select a car that suits your need, budget and lifestyle. Before you make down payment, make sure you have a test drive and find if there is any feature in the car that you don’t like. This is even more important if you’re switching from one type of car to another; for example, from a hatchback to coupe.

  • Get the car (used one) checked – If you’re purchasing an old car, you must get it checked by a registered car mechanic. You can also check the car’s history by using its vehicle identification number or VIN. After all you must not purchase a great looking car with a list of issues.

  • Get a better car price – You must bargain the car price. Most car dealers keep the base price high as they know that the customers are more likely to bargain to cut down the cost of the car. However, if the car dealer is not willing to reduce the cost, you can ask him to provide you with an extended warranty or a spare tire. You can’t make such a deal in case of a new car; such a deal is only possible with a used car.

  • Do the paperwork – Once you choose the car and have required conversation with the dealer, the salesperson will ask you to do necessary paperwork in order to get auto financing for the car. If you have already gathered all the documents, then the entire process of loan approval and funding would not take much time. If you have a good credit rating, then getting your loan sanctioned would be even less time-consuming.

Tips to save on auto financing

Auto loan often comes with high interest rates, but you can save on the monthly premiums by following some easy tips. Here are the tips which can help you avoid paying hundreds of dollars as interests.

  • Calculate the car financing – When it comes to get a better auto financing deal, this should be considered as the first and foremost step. Unless you do all the calculations related to taking out a car loan, you may need to pay much higher in interests than what you’re actually worth. You can make use of online calculators to calculate the interests as well as other fees related to the loan. Shop around and get quotes provided by different auto dealers, and do the calculations. It would help you get the best deal in terms of both money and other loan conditions.

  • Improve your credit rating – However, before you apply for an auto financing, try to improve your credit rating as well as the FICO score. Having a better credit will surely help you make a better car financing deal. Also check the copy of your credit report for any discrepancies. If there is any, report it promptly to the concerning authority. Keep your credit report error-free and improve your credit.

  • Make higher down payment – Try to pay higher amount as down payment. The more you will pay upfront, the lower interests will be charged.

Getting an auto financing is almost inevitable in order to buy a car. However, make sure you take out a loan amount that you can easily afford to pay back.

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