|3 STEPS TO TAKE BEFORE YOU TAKE OUT AN AUTO LOAN|
|Posted on: Nov. 28, 2016 in Car Loans, Credit, Credit Score, Debt|
If you’re in the market for a used car, you may be concerned about your ability to get a loan. An auto loan can help to improve your credit by giving you an opportunity to show that you are a responsible borrower and on the road to a better credit. Before you head out to buy that car, here are a few things you can do to help yourself in the process.
1. Know where you stand. You may suspect your credit isn’t great, but knowing exactly what your score is can set you up for a more successful buying experience. You can request a copy of your full credit report from each of the three major credit bureaus on an annual basis. If you haven’t requested yours within the last year, you should do this. Not only will you find out what’s included in the reports that lending agencies will see when you seek out your auto loan, you can deal with any discrepancies you find before you’ve picked out your dream car.
2. Think about your finances. If you don’t currently have a budget, now is the time to prepare one. Before applying for any loan, you need to know how much you can comfortably pay back. This is particularly important if your credit score is low. Getting an auto loan and showing you can pay it back can help your score, but if you bite off more than you can chew and fail to pay back your loan, you’ll end up hurting your score instead. In addition to the loan, you’ll also need to consider the cost of gas, insurance and license and registration fees. Setting aside funds for routine maintenance and inevitable repairs will help you avoid catastrophic surprises. You should strive to not spend more than 20% of your gross monthly income on your transportation costs.
3. Read the fine print. When you’re presented with an auto financing contract, be sure to read it thoroughly. It’s imperative that you understand all the terms and conditions of the agreement. If there are any sections that you do not understand, be sure to ask about them. This includes any early repayment penalties, late fees, and the like. Avoiding surprises will help you pay back your loan timely and without incident.
Knowing what you’re getting yourself into with your auto loan will set you up for success. Walking in with a reasonable expectation of what kind of loan terms your credit score can get you and what your budget allows you, you won’t be caught off guard down the road.
If you need auto financing but your credit is keeping you from getting approved, CreditYes can help! We can match you with a dealership in your area that will be with you every step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!