Buying your first car is exciting for most people, but it can also be risky if you don’t know what you’re doing. If you’re preparing to apply for a loan for your first vehicle, you’ve come to the right place on the internet. Keep reading to learn some helpful tips to help you on your way to cruising down the road in your first car.
1. Review Your Credit Report
Lenders pay attention to your credit report because they want to determine if you can maintain payments. Since this is your first loan, you may have little on your credit report, but you should still check it regardless. According to NerdWallet, when looking at your credit report, you want to ensure there are no errors, such as incorrect or closed accounts, that remain open on your credit report.
2. Compare Lenders
You wouldn’t buy a pair of shoes without seeing if you can find them cheaper elsewhere, and you shouldn’t agree to a loan without shopping around first. When you first go to iselect compare car loans, you want to make sure that you pay attention to what each lender is offering. Take notes while you’re doing your research so you can easily find what you’re looking for if you have any questions or when you’re ready to decide on a lender.
3. Pay Attention to Special Rate-Reductions
Some lenders offer reductions on your interest rates if you follow specific requirements. For example, one lender may offer a notable rate reduction if you use direct deposit and set up automatic payments using that direct deposit. Another lender may offer a rate reduction later down the line if you make a certain number of payments on time. Feel free to ask your lender if there are any rate reduction opportunities that you could take advantage of so you can do what you can to meet the requirements.
4 Try to Find a Co-Signer
If you’re unaware, a co-signer is somebody who takes on a portion of the financial responsibility of the loan you are applying for. While they won’t have any rights to your vehicle, they can receive negative marks on their credit score if you fail to live up to your end of the contract. A worthwhile co-signer should have high credit, a clean credit report, and a good income. If the co-signer you want doesn’t have those qualities, there is a good chance that your application will get rejected.
5. Don’t Borrow More Than You Need
The most important thing you can remember is only to borrow what you need, even if that means purchasing a vehicle that is less expensive than the one you want. Remember, you’re applying for a loan, which means you must pay back every last cent, plus interest and other fees. If you cannot make the monthly payment, you could have your car repossessed, which would look horrible on your credit report. It’s also important to stay within your means because your credit report will also take a hit if you miss a payment or are late by even a day. Make sure you know what you’re getting into before you sign anything.
Applying for a car loan is a major step to adulthood and getting approved for a car loan shows that you’re ready to make significant financial decisions. If you’re unsure about anything, whether it’s the terminology or your payment schedule, call your lender to ask them your questions. It’s their job to make sure you’re well informed about the documents you sign, so bring any question you have to their attention as soon as possible.