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Ask these 6 questions before getting a car loan
A few answers now can save you money on your car loan down the road.
Putting as much effort into getting a car loan is as important as finding the perfect car. Since no loan is perfect for every financial situation, you have to do your homework. Getting a bad deal may force you into paying extra every month or cost you more over the life of your loan.
6 questions to ask before getting a car loan
To find the best deal, you have to ask questions. Here are the top 6 car loan questions you should ask yourself before getting a car loan.
4 tips to comparing lenders
It pays to shop around when you’re looking for the best car loan. Knowing these four tips is a move in the right direction.
- Prequalify. While it’s not a guarantee your application will be accepted, prequalifying for an auto loan can give you the rate and term you might qualify for without a hard credit pull. This allows you to compare several providers without taking as many hits to your credit score.
- Compare apples to apples. In general, the interest rate you get depends on your income, credit score, the loan term you choose and the vehicle. Make sure any rates you’re comparing have similar loan terms and that the vehicle and your personal and financial information is the same.
- Make sure there are no restrictions. Some lenders will only write a car loan when you purchase a car from a network of partnered dealerships. Others won’t lend money if you purchase a vehicle from a private seller, or won’t refinance your current vehicle. Lenders may also exclude vehicles with high mileage or specific car makes.
- Don’t just go with dealership financing. Dealerships often charge a higher interest rate than what you can qualify for elsewhere and likely shouldn’t be your default choice.
Documents to bring when you apply
Have the following ready when you apply for a car loan:
- Drivers license or another government-issued ID
- Recent pay stubs and bank statements
- Proof of residence — usually a utility bill, mortgage payment or similar document that has your full name and residential address
- Vehicle information — including the make and model, year, VIN number and purchase price
- Method of payment for your down payment
- Current vehicle registration if you’re trading in your vehicle
- Proof of insurance
Find a car loan to apply for today
When shopping for a car loan, you’ll want to weigh the total cost with the monthly payment you can afford. It pays to shop around. It also pays to compare different types of auto loans and different lenders.
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