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5 Tips for Getting the Best Car Loan

In order to secure the best available car loan for you and your situation, there are some steps you will want to take before you even apply and during your application. Properly managed, the car loan application through Massachusetts car loans can yield unexpectedly low interest rates or favorable terms that you may not have been expecting in the current economic market or with your own, personal economic situation. Here are five tips that anyone can follow which will drastically increase your chances of securing not just any car loan, but getting the best car loan available for you:

  1. Master your credit: Of course your credit score is going to be a primary factor in determining whether or not you are eligible for an auto loan - that and your income level. Your credit reports as reported by the three major agencies; Experian, Equifax and TransUnion, play an integral part in letting a potential lender know how you are likely to treat the lender/borrower relationship that they are thinking of establishing with you. If you have treated past lenders well, paying debts faithfully and on time all of the time, then you will impress upon them that you are deserving of a loan. If your credit report shows, however, that you have many (recent) late payments on your debts, an account (or two) in collections, or a recent bankruptcy filing they will seriously think twice about extending credit to you. You can resolve this misgiving by knowing your own credit issues and deficiencies beforehand and resolving them to the best of your ability. Pay down your credit card balances in the month before you apply, negotiate or pay off any collections accounts, and stay current on all of your bills in the months leading up to your loan application.
  2. Impress them with your down payment: The problem with most car loans and borrowers today, if you asked, is that the car's value is worth less than is owed on the loan. This becoming "upside down" on a car payment is a common occurrence because many do not come up with sufficient down payment for their vehicle (if any at all). Not only does having a small down payment increase your chances of owing more on your new car than it is worth, but it also may increase the interest rates offered to you by the lender and adjust your loan in other negative ways. Having a strong (20% or more) down payment for your car yields many benefits and will save you money in the long run.
  3. Know what to ask for: There are three stages of car-shopping when the process is done absolutely correctly. The first is to pre-shop your vehicle to get an estimate of what it will cost - a round number that you can ask the bank for as a loan, the second is to more specifically shop what you want in a vehicle after you have been preapproved - choosing your colors, upgrades, features etc. that will make the car just right for you while staying well within the budget of what the bank offered, and finally getting to the dealer and either ordering or negotiating for your perfect car with them. In order to get the best car loan you should know how much you will need before you apply and not ask for too much, or too little.
  4. Get multiple quotes: Once you've fixed any issues with your credit score, you should shop multiple lenders for quotes for your car loan. Massachusetts car loans will help you by providing you with multiple quotes from lenders that you can compare side-by-side for best comparison.
  5. Don't be swayed by payment amount alone: Interest rates being equal a car loan for 60 months at $200 per month is worse than a car loan for 48 months at $300 per month. Though the smaller payment is actually less principal over time, the interest paid over 5 years will actually make you pay more over the life of the loan than if you had taken the higher monthly payment for a shorter period of time. While this is something to keep in mind, do not accept a loan that will make you "car poor" and struggling to make your payments. It's not worth it.