Let us say you have been looking at some car magazines and online videos and you have come to the conclusion that the 2015 Chevrolet Impala, which has been voted the 2015 most affordable large car, is the car for you. You want to know how best to get financing for this car. What is your best option?
Generally, your best option is to look for a pre-approved loan from a credit union, bank or online lender before you even get to the dealership of choice. With a pre-approved loan, you already know that you have the money, which means that you can negotiate for the car as if you have cash.
This means you have more leeway to negotiate harder, you potentially have less financing fees and you will experience a smoother buying process. All these advantages will mean that you can make substantial savings in the purchase of a new car.
In order to get pre-approved loan you will need to observe the following:
- Verify your credit score.
Request for a credit report before you go to the bank to ensure that there are no errors in your credit score. This is important because credit card scores have been erroneous before and this can affect your creditworthiness without any legitimate reason.
- Find out the minimum auto lending requirements.
Most lenders, credit unions and banks have basic requirements for getting a pre-approved loan. Find out what your banks requirements are before you can visit the bank. For most financial institutions, you will need to have a debt to income ratio of 45% or less and a pre-tax revenue/income of at least USD 1,500.
This implies that if you can pay off some of your current debts, it will help you to reduce your debt to income ratio as much as possible.
- Shop around for other options
Do research to find out where you can get the cheapest financing for your car. Explore the personal loans option or dealership finance and insurance. Maybe your credit score can afford you a cheaper deal than a pre-approved loan. You will not know until you try to find out.
You want to ensure that you have explored all means before you can settle for one. This will help you avoid a potential “I-wish-I-knew” situation. Knowledge that you did your research will give you confidence and peace of mind that you got the best deal.
- Take your “blank check” to the dealership.
Once you have your pre-approved loan find out which car dealership has the best offers for your car. You can start by going online to sites like http://idealautousa.com/ that have a wide variety of cars at great rates. Shop around until you get the ideal shop, then go over and negotiate for the best possible deal. Make sure that you get insurance for the car before you drive out of the car dealership with your new car.
A pre-approved loan is usually the best option if you have a good credit score and you can afford the purchase. However, be sure to explore other options. Your particular circumstances may enable you to get a better deal.