Finding the perfect car loan is one of the most stressful parts of buying a new car – especially if you’re on a tight budget. If you need to finance your car, it can be difficult to find affordable financing from a bank or credit union.
Luckily, there are other great financing options available that don’t require as much documentation and effort.
Buying your next car from an independent dealer might be right for you. In many markets across America, some independent dealers sell used cars directly to the public instead of going through an intermediary like a franchised dealer.
By working directly with these independent dealers, customers can save thousands of dollars on their next vehicle because they aren’t paying the overhead costs and fixed markup associated with franchised dealerships. These independent dealers also tend to be more flexible when it comes to creating financing packages for their customers.
Here are some tips for finding the perfect car loan if you buy from an independent dealer:
Research Before You Start The Process
Before you start contacting different dealerships, find out as much information about the car that you want to buy as you can. The more information that you have, the more comfortable you will feel when you go to negotiate the price of your car. If you know that you have a certain monthly budget that you need to stay within, jot down the cost of each car that you are considering. The more information that you lay your hands on the better prepared you will be to find the best car loan.
If you are looking at two cars that are very similar in terms of their purchase price, but one has a higher interest rate, then that will have a significant impact on your overall cost of car ownership. Taking your time to crunch the numbers will help you to find the best car loan for your needs.
Don’t Just Look At New Cars.
When you get out your car payment calculator and start plugging in numbers, you might feel that you need to buy a new car. But if you start by looking only at new cars, you might be turned off by the high prices.
New cars depreciate as soon as you drive them off the lot. Most new cars will lose 24% of their value in the first year and around 10% every year after that.
If you buy a new car and finance it over five years, you might end up paying more in interest than the car is worth. Used cars also have their advantages. If you buy used, you won’t have to worry as much about depreciation. You can also get a lower interest rate when you finance a used car.
Even though you might have a harder time getting financing for a used car than a brand new one plus, used cars come with a lot more maintenance. You’ll likely have to put more money into maintenance than you would with a brand new car. If you have a low income, you may be able to get subsidized car insurance if you buy a used car.
Find Out How Much The Seller Will Finance
This might seem like an odd tip, but it is important to understand that it is in the seller’s best interest to get you the lowest rate possible. After all, they want to get paid as quickly as possible.
With most independent dealers, it will be very easy to obtain financing. This is because they don’t rely on banks or credit unions for financing. Instead, they can get funding from online lending companies that offer much more relaxed standards and documentation requirements than banks.
If you have poor credit or find it difficult to get approved for a loan from a traditional lender, you should start looking at online lenders.
When you visit the website of an online lender, you will have the opportunity to fill out a brief application form. The application process is quick and painless. You will have the opportunity to enter your basic information, as well as the year, make, and model of the car that you want to buy.
Check Your Credit Now
You should always check your credit before you start shopping for a car loan. You should also start checking your credit three to four months before you plan to buy a car so that you have plenty of time to fix any potential issues.
If you wait until you start shopping for a car to check your credit, you might not have enough time to resolve any issues.
Before you begin shopping for a car loan, you should pull your credit report from one of the three credit bureaus. You can do this online without cost.
When you pull your credit report, make sure that you pay close attention to all of the information listed. Ideally, you should aim for a FICO score of at least 660 or above. If your credit has a few minor issues, you should start working on fixing them now.
Estimate Your Monthly Costs
Before you head out to start shopping for a car, you should sit down with a calculator and a pen. Start by making a list of all of the monthly expenses that you have to deal with.
These might include rent or mortgage payments, utility bills, and any outstanding debts that you have. If you need to finance your car, you will also have to make sure that you have enough money set aside each month to make your car payments. How much will you need each month? Ask yourself, and let that be your guide when getting your car loan.
Get A Loan In Writing Before You Sign
When you finally find a car that you want to buy and the seller offers you financing, take a few minutes to review the financing contract before you sign it.
This is important because many financing contracts contain hidden loopholes that could get you into trouble later on. While reviewing the contract, make sure that you look out for the following:
Before you sign the contract, you should make sure that you understand the financing terms in the contract. If there are financing terms that you don’t understand, ask the seller for clarification.
You should also have a loan pre-approval or have financing lined up before you start shopping for a car. This will help you avoid getting stuck with a car that is out of your price range. Finally, be aware of any extra charges that may be tacked onto the purchase price. Some car dealers add on what are called “dealer fees” that can be as much as $1000.
When you start looking for financing options, don’t just focus on banks or credit unions. Instead, you should also consider online lenders. You can find an online lender by searching for “online car-loan” or “direct lender car-loans.” Some of the most popular car lenders in Ireland are Vendor Finance, Northridge Finance, and Sucuri. If you have poor credit or have been turned down for financing by banks and credit unions in the past, online lenders might be your best option. With all these tips, you can find the perfect car loan and make sure that you get the right terms for your situation. With the right financing, you will be behind the wheel of the car that you love in no time.