It’s that time again – time to purchase a new car. Maybe your current car is on its last leg, or perhaps you’re ready to take advantage of modern car features. Whatever your reason for shopping for a new car, getting the right bank auto loan is just as important as finding the right vehicle.
Some people arrange vehicle financing through the dealership, as this is fast and convenient. However, obtaining financing through the dealership doesn’t promise the best savings. Dealerships act as the middleman between customers and banks, thus they typically charge slightly higher interest rates for vehicle loans. If you’re looking to save money not only on your vehicle price, but also on your auto loan, here are ways to save money shopping for bank auto loans yourself.
1. Know your credit score
Before you submit an application for a bank auto loan, make sure that you check your credit score and your credit history. Banks will review your credit to determine whether you qualify for a loan, plus they will use your credit score to set the interest rate on your loan. It goes without saying that the better your credit score, the better your bank interest rate.
You can check your credit report by visiting AnnualCreditReport.com. Each consumer is entitled to one free credit report each year. Likewise, you can order your credit score through MyFico.com. A credit score 680 or higher is considered good, and if your credit score falls in this range, you’ll qualify for the lowest interest rates. If your score needs a little help, always pay your bills on time and pay down your debt. Both factors play a significant role in your credit score.
2. Speak with multiple banks
If you’re looking to save money on bank auto loans, don’t just visit one bank. Interest rates vary by financial institution. For this matter, you need to get no-obligation quotes from at least three lenders. Getting a loan quote is easy. Simply complete an application in-person or online by providing your personal information, income and desired loan amount. Within a couple of hours, the lender will notify you with a decision, plus the terms of your loan, if approved.
3. Up your down payment
A down payment is not required when buying a new car. But if you have extra cash lying around, it doesn’t hurt to put a sizable down payment on the car. A down payment reduces how much you need to finance. Plus, having a large stake in the vehicle may move your lender to reduce your interest rate. Aim for a down payment around 20% of the sale price.
4. Avoid car loan add-ons
Car salesmen aren’t the only ones offering vehicle add-ons, which can increase the final price of your car. If you apply for bank auto loans, the banker handling your paperwork may also suggest add-ons. This can include supplementary insurance which will pay off the vehicle if you die, or protection insurance which temporarily pays your car loan if you become injured, ill or disabled. These extras are good to have, however, the price of these add-ons are wrapped into your auto loan, thus increasing your total balance and monthly payment.