subject: Auto-Loan: Do Your Homework! [print this page] Auto-Loan: Do Your Homework!
When we think of getting an auto loan, many of us think of getting them at the dealership when we pay for the car, and then hope they are able to give us a good deal. We may be at the dealership for quite a while trying to work out a good deal with them and exploring all the options they are willing to do for us, but how often do we really do the homework needed ahead of time?
If you want to get a good deal on an auto loan (getting a low interest rate), it is important that you check your credit score. Unless you have a very good credit score, you may want to consider spending some time improving your credit score before trying to get the loan. Remember, the higher your credit score, generally, the less interest you will pay. Think about all the extra money you could save if your interest rate was cut in half, or all the extra upgrades you could afford with a much lower interest rate! Therefore, if you have the time, waiting until your credit score is the best it can be before trying to get an auto loan would be ideal.
Once you have the credit score you want (or are satisfied with), it is time to shop around to compare. Shop around other places besides the dealership before you visit the dealership so you have leverage for negotiation at the dealership. Lots of times, banks and on-line services will offer better deals on auto loans than the dealership. Dealerships may believe you have not shopped around for comparison if you go through the dealership and do not mention that you have knowledge of what other places will offer. Once you are at the dealership, see if they will match whichever deal you were able to find that was the best one.
It is important to check the rules of each loan before making your final selection, so the interest rate is not the only thing to look at. Lots of times, the rules of the loan can make what seemed to be a good deal, not a very good deal at all. For example, being penalized if you are able to pay off the loan early, and other such charges and fees you may not be aware of.
