An auto loan can certainly make affording a new or used car much easier on your wallet. When applying for any type of financing, though, it's important to educate yourself on your loan options before submitting any applications. From there, you'll be able to select the type of financing that best suits your needs and buy your next car with confidence.
With that in mind, there are three things worth checking off your list before you apply for an auto loan.
Check Your Credit Report
Your credit score will be a determining factor with most types of auto loan applications, so it's in your best interest to know where you stand before you start submitting applications. You can pull a free copy of your credit report from any number of online platforms; from there, be sure to look at not just your overall score, but your entire credit history. Carefully scrutinize each section to make sure there aren't any errors that could be affecting your score.
If there are any mistakes on your credit report, file a formal dispute with the proper reporting bureau and hold off on submitting any applications for financing until the errors are corrected.
Explore Your Financing Options
There are many financing options to consider when you're buying a new or used car. Most major banks and credit unions offer their own car loans. In some cases, you may even be able to take out a personal loan and use it as a car loan. If your credit isn't great, you might even consider applying for a "buy here pay here" dealership loan. These auto loans often do not require a credit check, although interest rates may be higher and you will still need to have proof of income.
If you decide to apply for financing through a bank or credit union, you can usually get pre-approved in a matter of minutes online. While a pre-approval is not a guarantee that your formal application will be approved, this is a quick and easy way to get a better feel for how large of an auto loan you may qualify for. From there, you can even print out a pre-approval letter and take it to the dealership with you as a means of streamlining the car-buying process.
By doing a little research and preparation before you take out your next auto loan, you can find the financing option that best suits your needs. Contact a lender in your area to learn more about auto loans.