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Why Now is Actually a Good Time for an Auto Loan

Why Now is Actually a Good Time for an Auto Loan

With the United States economy one misstep away from a full blown financial crisis, you might expect that today would be the worst time to take out an auto loan. Just take a look at the mortgage and home equity market, where credit has been sapped dry and default rates have skyrocketed. Even student loan lenders have been affected, so it’s only a matter of time before the lending industry suffers too, right? As it turns out, that’s not quite the case, especially if you have a decent credit score. In fact, for consumers looking for financing with a good credit score, you’re likely to find some of the best deals ever in recent years. That’s because lenders and dealers are willing to sacrifice to make a sale in the struggling economy; their desperation can save you thousands. Even if you don’t have great credit, dealers will do whatever it takes to make sure you get approved. Sure, your interest rate might be a little higher than those available several years ago, but getting vehicle financing today is still nothing compared to attempting to get a mortgage. If you’re looking for some other ways to take advantage of great deals on auto financing right now, follow some of these helpful tips.

Getting the Best Deal for Your Auto Loan

  • First off, decide what you can really afford for a loan. No deal is worth it if it ends up completely ruining your budget. Plan out your financing in advance and try to come up with a large down payment on the vehicle. Industry experts tend to agree that the safest vehicle loans do not take more than 10% of your monthly income.
  • Before you even set foot in a car dealership, take the time to find the lowest rate on financing. Even though most people get their financing through the dealer, there are many lenders out there offering cheaper rates. Check out various banks and credit unions in your area for their rates and don’t forget that there are literally hundreds of lenders online at your disposal.
  • When you do eventually find the lowest rate on your financing, bring proof that you were approved for it with you to the dealer. Once you’ve locked in the price for the vehicle, let the dealer know you expect them to match or beat the rate you’ve been approved for. If they can match the financing rate – great, you’ve got your new vehicle! If not, try another dealership or actually take out the loan you were approved for and use it to buy the car.
  • Finally, your credit score plays a major factor in determining your auto loan interest rate. The higher your credit score, the more likely lenders will be willing to work with you and get you a better deal. So in the months before you apply to borrow, do everything you can to increase your score, such as pay down your balances and check for any errors on your credit report.

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