Looking to buy a new (or new-to-you) car? If so, then you'll probably need to take out an auto loan to finance at least some (if not most) of your purchase. Auto loans are available through banks, credit unions, and even dealerships. When you take out an auto loan, of course you want to make sure you're getting the best possible terms — and there are a few ways to make this happen.
Opt for a Shorter Payoff Term
While choosing an auto loan with a longer payoff term may save you money on your monthly payments, you'll end up paying more over the life of the loan this way. That's because you'll be paying interest on your loan for longer. If you can afford to make a higher monthly payment, consider opting for a shorter payoff term (such as three years instead of five years). You could save thousands this way.
Consider Finding a Co-Signer
If you have less-than-ideal credit, you may have a harder time getting approved for an auto loan with a low interest rate and other favorable terms. The good news, however, is that you can always get a co-signer to sign onto your loan with you; doing so allows you to essentially "take credit" for your co-signer's credit score, increasing your chances of getting approved with favorable terms.
Make a Larger Down Payment
The larger the down payment you're able to make on your vehicle, the less you'll need to finance. And the smaller the loan you need to take out, the easier it will be for you to get approved with favorable terms--even if your credit isn't perfect. With a larger down payment, you'll also reduce your monthly payments and be able to pay off your vehicle sooner, enjoying additional equity as a result.
Explore Credit Union Auto Loans
When it comes to competitive interest rates, credit unions tend to offer some of the best auto loans around. If you're not already a credit union member, now would be a good time to look into becoming one. Credit union auto lending services also tend to have additional services (such as car-matching services) to make your car-shopping experience easier as an added bonus.
These are just a few of the best tips to keep in mind if you're looking to take out an auto loan in the near future. By following these, you'll be on your way to a great loan in no time.
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