Applying for an Auto Loan? Here’s Everything You Need to Know
So, you’re applying for an auto loan. Well, pat yourself on the back for making it this far. But we won’t lie: applying for a car loan can be a very exhausting endeavour without the right assistance. As such, it helps to know every little piece of information possible, every possible detail, and every term surrounding your potential loan.
Well, in that case, you’ve come to the right place.
Regardless of if you have good credit, poor credit, have filed for bankruptcy or a consumer proposal, if you’re looking to buy a vehicle chances are you’re taking out an auto loan. After all, only one in five people actually pay cash up front when buying a vehicle. That means 80% of Canadians take an auto loan from a bank, auto finance company, or credit union when buying a vehicle.
If you’re contemplating taking out a loan, there are several things you should do first.
1. Review Your Credit
The very first thing you should do before applying for an auto loan is review your credit. Speak to a professional to find out exactly why your credit standing is in the shape that it’s in, and talk to an auto specialist to find out what kind of car would be right for you considering your circumstances. If you have good credit, then buying a brand-new car might make sense, if it’s something you’re really interested in. If not, it usually makes more sense to buy used, as cars depreciate the second you drive off the lot. All depends on your credit.
2. Find Out What Car You Can Afford
We know you’re excited about taking a few test drives and starting to hit up the dealerships in your area, but make sure that you do your research first. Made a budget of how much you can afford to spend per month, and remember not only to incorporate what you’ll pay towards your auto loan (including both the principal and the interest rate), but also, insurance, gas, maintenance, and other costs. Also remember that faster, sportier, and newer cars are usually accompanied with pricier insurance packages. So if you have your heart set on that brand new Audi TT, you may want to wait a few more years before you park it in your driveway.
Having a budget that you follow to the letter eliminates any surprise costs, and will give you a clear picture of what kind of car you can buy where you’ll pay all your bills on time, and won’t fall behind on other bills like credit cards, mortgage, etc. It’s important for those of us with poor credit to know that taking this loan is the first step to reestablishing your credit, and by paying it on time, you can significantly improve your credit score within months.
3. Look at the Big Picture
As we mentioned above, calculate not how much your auto loan costs overall, but how much you’ll pay per month. Remember that a lower down payment may mean you pay less now, but it will increase your interest rates, and ergo, the total cost of your vehicle. Run the details of your loan through an auto loan calculator to get a better understanding of what your bills would like for each specific vehicle that you’re interested in purchasing.
4. Shop Around
This is a very important rule to taking an auto loan or buying a new vehicle. Concerning the former, know that you have a variety of options for taking a loan, whether through a credit union, bank, or online lender. If you have poor credit, however, know that at Auto Loan Solutions, our team of specialists can appropriate the best possible loan available to you, with the most affordable interest rates. With over 5,000 cars and trucks in stock, we can also find you the car of your dreams, and one that will help bring your credit back to par. Regardless of your credit situation, we can have you pre-approved for a loan, and in the vehicle that will drive you towards financial freedom, in no time. Apply Now.
5. Limit Your Credit Searches
Did you know that each time a lender or creditor makes a hard inquiry into your credit score, it has the potential of directly affecting your credit score? In some cases, it can even bring down your score by 3-5 points each time! If you’re looking to applying for an auto loan, but have submitted your application to a dozen lenders, you can be drastically hurting your credit score. Do your research, and find a trusted, reputable auto loan provider first. Your credit will thank you later.
If you’re looking to apply for an auto loan with us here at Auto Loan Solutions, Ontario’s largest auto loan supplier, know that you’re in very capable hands. After all, since 1959, we’ve helped thousands of customers get on the road to reestablishing their credit.
At Auto Loan Solutions,
- Whether you have good or bad credit, we will always offer you the best possible rates available to you
- Our trained specialists will spend as much time as necessary to ensure that you find the car that’s perfect for your needs
- You can be pre-approved within 24 – 48 hours
- You’ll always get superior customer service. We will work around the clock to provide you with an affordable auto loan and car of your choosing.
If you’re in need of some better credit-building habits to follow to make sure you pay your auto loan responsibly, look no further:
1. ALWAYS pay your bills on time – set up automatic payments when available!
2. Develop a great budgeting plan that factors in all your monthly expenses.
3. Use Your Credit Cards but use them wisely!
4. Find the best interest rates available to you. You may be eligible for refinancing your auto loan if you’ve already been working on reestablishing your credit score, especially now when interest rates are low. Inquire!
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