Getting a good deal on your auto loan could mean that you save a lot of money on the price of your car. Remember, most of the work regarding getting a good loan happens before you step into a dealership. Here are the details.

Credit Check

How much you can borrow and at what interest depends on your credit score and income. So, the first thing to do is order a copy and check your credit report. Correct mistakes, if any. If your score is below 600, spend six months improving your score. If your score is over 700, take the next step.

Multiple Applications

Now request loan offers from large national banks, local community banks, credit unions, and online lenders. Compare these quotes and see which is best. If you’re buying a used car, ensure that you mention who you’re buying from in your application.

Pre-Approval

 Select the best offers and apply for pre-approval. Complete all applications in the same two weeks as pre-approval requires a hard credit pull. You will receive a specific interest rate offer and the maximum amount you can borrow.

Setting Budgets

Use an auto loan calculator to design your loan. Enter your down payment, trade-in value of the current car, and lending terms to find the monthly payment that fits in your budget. If the EMI is too much, you can always borrow less. It’s important to be able to afford the payments.

Car Search

Check and conditions from the lender about the type of car the loan is for and search for a car that fits your budget and needs. You’ll mostly have 30 days to use the loan offer. So start searching and setting up test-drives.

Offer Review

Once you find a car, listen to the dealer’s financing offer. Let him know you have a preapproved offer and see if he can beat it. Ensure that the dealer offer does not contain hidden fees, a longer-term, and an early payoff penalty.

Finalize Loan

Now, choose which offer you want to go ahead with. Work out how the dealer gets the payment. Complete all the paperwork and formalities, and ensure that the financing is finalized. Only then drive away in your new car.