Smart Spending

US Auto Lending Industry Financing More Car Purchases

Financing a car has become noticeably easier over the last few months.  The auto lending market is one of the few financial markets that has returned to normal after the recession.  Getting your shiny new vehicle from the dealership or used car lot will likely mean that you will have to get an auto loan. A lot of paperwork will have to be signed, too, but getting the money will be the primary issue. There are several sources of money available, and you can choose which one is most appealing or available to you.

Before you apply for a car loan, you want to make sure that your credit report and credit score are in good condition. Everyone is entitled to one free credit report, but you will have to pay to get the credit score. With so much identity theft taking place today, you want to make sure that someone else has not negatively affected your credit score. You want to take this step before starting the process, because it will affect how much interest you are going to be charged for the auto loan, and how long you will have to pay back the loan. Credit is harder to get these days, and having a better credit score will help you get a better loan for your car. After you are sure that your credit score is in order, and that you have a good one, then you can seek auto financing.

Another thing you want to do before you apply for a car loan is to find out what you can comfortably afford each month. When you go to look at cars, the dealer will always try and sell you more than you can afford – which is great for them, but not for you.

USNews says that you should apply to several lenders when trying to find your perfect car loan. Just like you would not only apply for one job, you need to realize that you need to see what kind of options are out there before choosing one.

When you buy a new or newer vehicle, you can get financing directly from the dealer. They act as brokers for multiple lenders, says MoneyUnder30. In some cases, you may even be able to get a loan with 0 percent interest for a while. This will be the cheapest way to go – if you have excellent credit.

You can also go to a bank or credit union to get an auto loan. Get several quotes on loans before choosing one, then you could use this quote to give you even better bargaining power when talking to your dealer about a loan, says Money.CNN. You may want to think twice about a loan from a dealership, says LendingTree, because you will probably have less time to pay it back, which will mean higher payments.

One of the best things you can do when getting a car loan is to put some money down with it. This will reduce the amount of interest you will owe and it will also give you lower payments. You might also be able to apply the dealer’s offer of a rebate toward a down payment, which will make your payments even lower.

If you are a homeowner and have some equity in it, you might be able to get a home equity loan. This could be a real advantage because it will give you a considerably lower interest rate than you would get from a bank or a dealer.