There are several points to keep in mind when looking for the car loan that fits you

A good car loan is more than just a low interest rate

There’s an old saying that when looking for a home there are 3 things to remember….. location, location & location! But when looking to finance the purchase of either a new or used car the same thing can’t be said about the interest rate. While its important its often not the most important one single consideration. There are actually several things that one needs to keep in mind when shopping for a car loan today. It all starts with what you are looking for. What is the most important thing to you? For many the answer to this question is a low monthly payment. This is very understandable and there are several ways to address lowering your monthly payment. Let’s look at two:

1. Extend the term of a loan. This probably has the most impact. The monthly payment of a loan for 36 months is noticeably higher than one for 72 months. So if you have a limited monthly amount you can pay, then getting a loan with a longer term is going to work much better for you than one with a more limited term.
2. Another obvious but often overlooked answer is to try and borrow less. Look a car that is actually “less” than you can afford to pay. On top of this, if you have some funds set aside; put some money down on the car. Borrowing less and reducing it further with money down is a smart way to lower your payments

Other important considerations include understanding your credit and knowing that how your credit is perceived will definitely have an influence in setting the interest rate on your car financing. When you have very good or excellent credit, you should both expect and demand a very market competitive rate and don’t settle for anything else. However, if you are like millions of Americans with fair, poor or even bad credit, then it’s up to you to take a few steps to try and get a better interest rate. One of the best ways to start this process is to get a copy of your credit score. You can get them free from the credit reporting agencies such as Experian and you will also find them offered online. This will give you the same information available to the person offering the financing and puts you on a “level playing field”. Once you have your credit report you can see what you are up against. If there are mistakes, you can start the process of insisting that they be corrected. If it’s correct, then you job is to be sure you get the best rates applicable to your score.

The next thing to remember is to be flexible. Always remember there’s more than one car available in the market so don’t get overly focused on one that you “must have”. If you insist on settling for one car, this can give the seller or lender a real advantage in getting you to accept what’s in their best interest and not necessarily yours. Many times there are makes, models and colors that a dealer is incentivized to sell and on these models, they are often offering attractive financing terms including special interest rates and discounts. These can make a really good buy.

So remember when it comes to getting the right auto financing that fits your needs, there a combination of things to consider. Its how you work through the different considerations that determines how your final car loan looks and if it best fits your particular situation. A quick review shows the following all contribute to a car loan that works for you:

1. Know your credit so you are confident you are getting the right interest rate.
2. Don’t buy “too” much car. Spend a little less and get a bit smaller loan.
3. Putting some money down often works to your advantage.

Be flexible in what you are looking for. Certain cars may be offering much better deals.