If you are looking for the best and easiest way to buy a car, either new or second hand, you should have a look at your options in terms of car loans. These loans are available under very favorable conditions and they are also very easy to obtain – here is how the process works.
Step One: Credit Score Verification
Your credit score will play a very important role in the calculation of the interest rate you will have to pay on your loan. The higher your credit score, the better your loan terms – in other words, the more creditworthy you prove to be, the lower your credit interest rates. If you don’t know what your current credit score is, you can check with your bank – most institutions provide this service for free once a year – or you can verify your score using an online calculator (read more).
Step Two: Calculate How Much You Can Afford
This one is probably the most self-explanatory step: you should figure out not only the type of the car you can afford, but you will also need to calculate how much you can afford to spend on loan repayment each month. Typically, car loans are available for 3, 4, 5 or 6-year periods – the longer the loan term, the lower the repayment each month, but if you calculate how much you will have to pay back by the end of the term, you will see that longer-term loans are more expensive.
Step Three: Obtain a Pre-Approval
If you have decided to get a loan to buy a car, you can start shopping for the right loan online. You can choose a solution offered by your own bank, but you can also turn to other lenders of car loans if their financing options work better for you.
If you find a loan that suits your requirements and possibilities, fill out the application form for the loan. Most loan lenders are very quick to reply – if your application is accepted, you will get pre-approved, which means that you will get something similar to a blank check for the amount of your loan that you can use for a predefined period of time. You don’t have to spend the entire sum – you can buy a car that is cheaper than the amount of your loan, but you can buy a car that exceeds your loan amount only if you pay the difference out of your pocket or you convince the car dealer to trade in your car.
The Final Step: Choosing Your Car
Once you get the pre-approval, you can choose your car. Make a list with your requirements, then start visiting car dealerships – with the approval from the provider of car loans you have chosen and an accurate wish list, you will surely be able to get the perfect car.