How to Get a Car Loan

Whether you're a first time borrower or a seasoned pro, this guide will make that car loan search a little less traumatic and save you big bucks in the long run.

Instructions

  • Step 1: Be stable Wait 6 months to a year if you've recently moved, gotten a new job, or had income problems before applying for a loan to get the lowest interest rate possible.
  • Step 2: Plan a budget Gather your bills and plan a monthly budget to calculate the maximum loan payment you can afford as you search for the right car at the right price.
  • Step 3: Check credit score Check your credit score to gauge how much money you can borrow and what your interest rate will be; a high score will give you more leverage and negotiating power.
  • TIP: Consider saving for a large down payment or get a cosigner if your credit score is low.
  • Step 4: Reduce debt Reduce or eliminate outstanding debt, such as overdue credit card bills, insurance payments, or other loans before applying for a car loan.
  • TIP: Avoid too many credit cards or charge accounts to limit your risk to the bank.
  • Step 5: Comparison shop Compare different interest rates, rebates, and other finance offers between your bank, the auto dealer, and other lenders.
  • Step 6: Wait for bank approval Wait for your bank to approve the loan and then go and get your new car.
  • FACT: The over 20,000 new car dealerships in the U.S. make an estimated $576 billion annually.

You Will Need

  • Responsibility
  • Monthly budget
  • Credit score
  • Internet access
  • Large down payment (optional)
  • Cosigner (optional)

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