Follow these 8 simple steps and insider secrets to save thousands of dollars on your car loan. It’s a fact that a small change can make a big difference in what you’ll pay for your car loan. Don’t apply for a car loan until you read this important information.
1. Your Credit Score: You credit score directly affects your interest rate. You must know your credit rating and fix any mistakes on it BEFORE you apply for your car loan. All US consumers are entitled to a free credit report.
If you have a bad credit report you can still get a car loan, but you’ll be paying a higher rate.
Insider Tip: If you have a bad credit report make sure you get a loan with no early payout penalties. As you make payments on your loan your credit score will improve, then you’ll be able to refinance the car loan to a lower interest rate.
2. How Much Can You Afford: Work out how much you can afford each month for repayments. Don’t forget to leave enough for insurance, gas and maintenance.
Insider Tip: Only apply for what you believe you can afford. If you make an application and you are not approved, this will still appear on your credit report. This is not good because future lenders will see it and realize that you were previously rejected.
3. Shop around: But you don’t have to walk the streets; there are Brokers who’ll do the leg work for you. And you can try more than one Broker too.
Insider Tip: Don’t sign any paperwork until you’ve chosen your preferred lender. Once you sign, you are authorising the lender to commence all the credit checks etc. You only want one lender doing this. Otherwise it’ll make future loan applications much harder because all applications appear on your credit report.
Your credit report is a valuable asset to you and you must protect it.
4. Check the fine print: Ask specifically about late payment penalties and early payout clauses. You should always keep flexibility in any loan you get because you just don’t know what’s going to happen in the future. So make sure the early payout clauses are reasonable.
Insider Tip: I know of some lenders who double the interest rate on their loans if you miss a payment date by even a day. They might have the lowest rate but if you miss any payments you’ll end up paying a lot more. Make sure you know what happens if you miss a payment.
5. Payout Your Credit Card: If you can, payout your credit card before you make the final application as any other debts you have will go against you.
Insider Tip: The less you owe on other loans and credit cards, they lower the interest rate you’ll get. It common sense but few people realize it. Essentially the less you owe the lower risk you’ll be judged to be and therefore you’ll get a better rate.
6. Increase Your Income: If you can, work some extra hours in the month before you make the final application. This could lower your interest rate as the lender will see you as a lower risk.
7. Include Everything: When the lender asks for a list of your assets, don’t undervalue all the stuff you have. Like your furniture and household items. The more assets you have the lower the rate you’ll get because you’ll be seen as a lower risk.
8. How Much Is Your Insurance Worth: Find out how much your life insurance policy and retirement fund are worth as this again could help prove that you’re a lower risk to the lender.
Follow these 8 steps and you’ll have the best chance at getting the right car loan for you.
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