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Must-Know Auto Loan Tips

If you’re considering purchasing a car, it’s likely you’re also looking to get an auto loan. Here are five tips that will help you find an auto loan that suits your needs.

Know Your Credit Score

Your credit score helps you qualify for a competitive interest rate. That’s why it’s vital that you check your credit score before applying for a car loan. It’s also a good idea to request a free copy of your credit report. This way, if you find any discrepancies in your credit report, you can have them corrected to improve your score.

Get a Shorter Loan Term

If your financial situation allows it, you should opt for a shorter loan term. Not only will the rate of interest be lower on short-term loans, but you’ll also end up spending less on your vehicle over time.

Make a Large Down Payment

You should try to make a minimum down payment of at least 20% of the car’s purchase price. But, if you can afford it, try to pay more than this. Making a large down payment means you’ll have to borrow less, which, in turn, will result in lower lifetime interest charges.

Time Your Purchase

Timing can make a lot of difference, especially when purchasing a car. If you don’t need a car immediately, try to push your purchase to the end of the year. Usually, dealerships will want to meet their quotas during the year-end, so they will be more likely to offer you lower interest rates. Additionally, you may be able to get a better interest rate from the dealership by getting a loan earlier in the week and later in the month.

Cover Your Fees

Many car buyers make the mistake of financing their taxes and fees – this is something you should avoid doing because you really don’t want to be paying interest on these extras. Instead, what you should do is account for these charges at the beginning of the process and try to pay them off in cash. It may seem more convenient to finance these charges, but you’ll save a lot by paying them off yourself.

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