Applying for an auto loan online is easy and convenient. Shoppers apply for a loan from their PC, any time they’re ready to shop. Even when car shopping strikes you in the middle of the night, the web is open and ready for your business. You can compare lenders, interest rates, and financing options. But there are disadvantages of applying for an auto loan online. Before taking the plunge, keep the following four tips in mind. Applying for an auto loan is less worrisome with the four tips below in mind.
1- Set a Budget
Don’t get in over your head when car shopping. Begin with a realistic budget, accounting for insurance costs and other miscellaneous fees. What seems like a great deal on the outside may turn sour if you cannot afford the monthly payments. Determine your budget after comparing earned income versus monthly expenses. Make sure that you set a budget that provides some leeway. Don’t become strapped for cash after buying a car!
2- Improve Your Credit
Most auto loan lenders rely on a person’s credit score to approve or deny their application. The higher the credit score, the lower the interest rates you’ll pay. A higher credit score also increases approval rates so more lenders will offer you a loan. Request copies of your credit report from the three major reporting bureaus. One free copy of each report from each bureau is available each year. Report inaccurate information or discrepancies in the report. Pay off as many debts as possible, stop using the credit cards, and save money to improve your credit score.
3- Compare Lenders
You can find a trustworthy auto loan lender online, but the task poses added challenges. Scammers mixed in with legitimate auto loan lenders are hard to distinguish online. They make their websites and offers look and sound realistic and very appealing. Check out lenders before completing an application. Sources like the Better Business Bureau (BBB) provide accurate, reliable lender information. Reviews posted by other customers also provide helpful information.
4- Don’t Forget the Down Payment
A typical down payment on a vehicle purchase is 10% – 20% of the total cost. The more money available for the down payment, the better the odds of getting approved for a loan. You also shorten the length of the loan, in turn decreasing interest fees. Many people pay above the 20% average down payment amount.