Shopping for a new vehicle can be overwhelming on its own without even considering the auto loan application process. But if you don’t take the time to research and compare auto loans, you may end up with a bad deal.
Before you begin to shop around for the best deal, check your credit report. Your overall credit will give you a general idea of what interest rates to expect. You should also consider your budget and how much you can afford to spend each month on vehicle loan payments. It’s important to make a purchase that you can afford. If you fall behind on loan payments, your vehicle may be at risk for repossession. A vehicle repossession negatively affects your credit for up to seven years. You should also keep in mind that shorter term loans will mean that you pay higher monthly payments, but less over the course of the loan.
When you start to apply for new credit in the form of an auto loan, your credit score will take a slight hit. This is why it’s important to submit all of your applications in a short time period; the credit bureaus will treat a number of applications in a shorter time frame as a single application, keeping the negative effect on your credit to a minimum.
Use this guide from Consumer Reports to make sure you get the best car loan possible.