3 Tips on How to Get the Best Car Loan

3 Tips on How to Get the Best Car Loan

3 Tips on How to Get the Best Car Loan

So you are in the market for a new car and want to make sure you get the best car loan. As you start to look at the number and types ofcar loans on the market you will soon discover that the decision will not be an easy one. For a start there are literally dozens of lenders and possibly hundreds of different types of loans to choose from.

Many new borrowers look for the cheapest interest rate, others look to get the highest possible loan amount, while the remainder sit back in a world of confusion. It doesn't have to be a difficult task, but you certainly need to have a clear mind and a definite plan of action when shopping for the best car loan. Everyone has their own particular needs and budget so it pays to plan ahead. Let's take a look at three things you can do to make sure you are getting the best deal.

Shop Around. One of the mistakes that many borrowers make is to choose the car before they choose a loan. By all means get some pricing on the cars you are interested in but don't fall into the trap of signing up with a dealership for the car loan as soon as you make your decision. Remember, the price of the car is not as important as the price of the loan, after all it is the loan you are paying for in the long run. Shopping around means finding the best car loan before you make your final decision, and this means going to a number of banks and credit unions to discuss your needs and obtaining a preapproval before you do the deal.

Decide on the Loan Type. Car loans can be either secured or unsecured. A secured loan means that the lender will take a lien on your car which means that it has a legal right to repossess your car if you do not make your payments on time. Having this security means that the lender can charge a lower rate and this means you will pay less in the long run. An unsecured personal loan means that the lender is taking all the risk, and because it has no security, will charge you a higher rate of interest.

Choose the Shortest Term. By paying you a personal loan out over the shortest possible term you will reduce the interest payable on the loan. This means that you should do a detailed budget and commit yourself to the maximum repayment possible. Paying your loan off quickly not only means that you pay less interest but also gives you a good standing with the lender. Future borrowing will be a lot easier if you stick to your plan.

By shopping around for the bestcar loan before you decide which car to purchase means that you will save money. Remember that a $500 discount on the purchase price of the car at a dealership can easily be lost by accepting a car loan which charges a higher rate than you may have been able to obtain at an alternative lender.

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