Here are five simple steps that could help you get a better deal on your auto loans.
1. Find out what your credit report says
The interest rates that are offered on auto loans are closely linked to borrowers’ credit reports and credit scores. The worse your report, and the lower your score, the more you’re likely to have to pay.
Before you think of applying for auto loans, get hold of a copy of your report. According to the Federal Trade Commission, you’re entitled to one free annual credit report, and the only authorized source for that is the website, AnnualCreditReport.com. Other websites may offer free reports, but they’re likely to be promotional incentives to sign up for a continuing (and paid-for) credit monitoring service. Of course, there’s nothing wrong with these in principle, if that’s what you require.
2. Fix your credit report
Companies that say they can fix your credit report are generally lying. However, there are often things you can do yourself that may remove blemishes and bump up your score.
To begin with check for errors. According to IndexCreditCards.com up to 70 percent of all credit reports in America contain one or more mistakes, and it’s important to fix these. That link (along with this one from the same site) provide advice for how to go about doing so.
If you have blemishes on your report that aren’t errors, then cherry-pick any that are possible to fix before you begin applying for auto loans. Last month, Fox Business suggested settling any small debts that have been passed to collection agencies, and bringing any delinquent credit cards up to date. Of course, you can only do what you can, but proving to prospective lenders that you’re taking your situation seriously, and have turned a corner, can improve your chances of approval, and sometimes shave the interest rate you have to pay.
3. Make the lender love you
Fox Business also recommended trying to scrape together as big a down payment as you can manage. Anything over 20 percent is likely to make the lender see you in a more positive light. At the same time, prove that you’re taking the borrowing process seriously by having ready the necessary paperwork. Have to hand a current utilities bill, your driving licence, a recent pay stub, and anything else that might support your application.
4. Don’t rely on your dealership
Of course, there are plenty of honest and principled dealers out there, but there are also plenty of scam artists (see Auto loans and beyond: five common car dealer scams). And you can’t tell which is which, just by looking. To be safe, arm yourself with quotes for auto loans before you set foot on the dealer’s lot. If the salesperson can really beat what you already have, then fair enough. Otherwise, go with another lender.
5. Shop around
Not all lenders have the same policies and criteria, and you might be surprised by just how different the rates you’re offered may be. So shop around. You can begin by obtaining quotes for auto loans on this site.
by Ethan Leak