What You Should Know About Getting Your First Vehicle Loan

5 June 2020
 Categories: Finance & Money, Blog

If you have never taken out a loan for a vehicle before, you may be unsure of how to go about the process of getting one. There are many factors to consider when taking out a loan for a car or vehicle. Get to know some of these factors. Then, you can feel more confident and sure of yourself when you go to purchase your new vehicle. 

Your Credit Score Matters

One of the things you should keep in mind when you are looking to get a vehicle loan is that your credit score matters. You may see car dealers stating that they will offer loans and deals to people with low or no credit. While this is possible, the rates on those low credit score loans are going to be much higher than the rates if you have fair or good credit. 

So, check your credit score and do what you can to either raise your credit score or maintain good credit before you apply for a vehicle loan. This may mean delaying your car purchase for a few months but the better interest rate will greatly benefit you in the long run. 

Plan on Making a Significant Down Payment

If you want the best terms and the best chance of paying off your car loan as fast as possible, you should plan on paying a significant down payment on the vehicle you are purchasing. Plan on paying at least 20 percent of the total cost of the vehicle upfront as a down payment. This will help to lower your monthly payments on your vehicle loan and may reduce your interest rate as well. 

Shop Around Before You Settle on a Car or a Loan

Shop around before you settle on your vehicle or your loan. You want to be sure you are getting the right deal for both. Contact multiple vehicle loan lenders to see who has the best interest rates and deals for you.

You should consider at least two or three lenders in the process. Do not let the car dealer force you to use their preferred lenders, either. Sometimes their rates are less desirable than other lenders. Be picky and you will be sure that you get a loan that works best for you. 

Now that you know some of the important facts to consider when you are getting your first vehicle loan, you can be sure that you are prepared for the process.