Buying a new car is already a daunting process on its own, but then you have to consider how you’re actually going to pay for it. Most people are aware of the usual method of paying for a car: start by putting a down payment towards the total cost of a car, then take out a loan to cover the rest of the price. However, there is some confusion when it comes to actually taking out a car loan. How do you go about doing that?
There are different options when it comes to car buyers looking to take out an auto loan—banks, dealers, and other financial institutions. Yes, you can take out a loan directly through the dealer. And it is a very convenient option to look into.
If you have a pre-established relationship with a particular bank or credit union, that may be a good option. Plus, credit unions are non-profits, meaning they may have lower interest rates.
Home Equity Line
You may also consider using a home equity line of credit if you own your own home. These loans are often tax-deductible and have low interest rates. The problem here is that if your home’s value drops, you are responsible for filling the gap out of pocket, so tread with caution.
Applying for a loan also depends largely on your credit score, a three-digit number that financial institutions use to determine your creditworthiness. The higher your score, the more lenders will trust you with their money, and the more likely you are to get approved. Have a good idea of what you can and can’t afford before you apply for a loan, as well.
It’s a good idea to get prequalified for a loan before you go to the dealership to purchase your car. That way, you already have a set number for how much money you are willing to put down, so you’ll be better-equipped to stand your ground during negotiations.
Have other questions about credit or financing, with Easy Auto Credit Help of Gateway Buick GMC of St. Louis, MO, you know we are here to help answer any questions you have and to help you through the process. Contact us today!