If you’re looking to buy your own car, you’ll likely also need to get a car loan. Getting approved for financing may sound daunting, but it’s not hard. Follow the steps mentioned below to ensure you are getting the best deal.
Shop Around for Financing Options
It’s important that you shop around and find out what interest rates different banks, credit unions, and online lenders will offer you based on your credit score and income level (if applicable). You’ll have multiple options available depending on where
Get Preapproved for Your Auto Loan
Before you even step foot in a dealership, get preapproved by an auto lender so you know how much you can afford to spend on a car. Most lenders offer preapproval within 24 hours, so there’s no reason not to do this step first. Remember that you don’t have to borrow as much as your preapproved limit. If the monthly payments seem too high, you can look for a cheaper car and borrow less.
Check Your Credit Score
Your credit score, if you live in the U.S., ranges between 300 and 850. Lenders use this to decide whether or not to lend you money. Your credit score also determines the rate you’ll need to pay for your loan. Given this, make sure to check your credit score before you start shopping for a car. If it is on the lower end, put your plans on hold and work toward improving your score. Once your credit score improves substantially, you can apply for a car loan.
Accept a Car Loan Offer
By this point, you’ve likely found the car you want, and now you’re going to take advantage of that car loan offer. You can now head to the bank and submit all the required documentation, like your driver’s license, proof of income, proof of vehicle insurance (if applicable), proof of residency, a blank check or cashier’s check for your down payment (if applicable), and any other documents that may be required by the lender. The banks will do a final review of your documents and arrange for funds for your car. Then, all that’s left is signing the paperwork, picking up your new ride, and driving it home!
