Buying a car is an important decision, and it can impact your finances in a big way. Even if you have good amount of savings, it is a good idea to take a loan. A car loan allows you to buy a car better than what you would have otherwise, and if you make the payments on time, you can expect to improve the credit score in years to come. Getting a car loan can be confusing, given that there are so many lenders and banks around, and the criteria are often many. Here are some of the things that matter in choosing the lender.
Check your credit score
When it comes to Canada vehicle financing, most auto loan lenders will check the credit score of the applicant before deciding on the interest rate. If you have a low score, do not fret, as yet. More often than not, credit scores can be overlooked by lenders for offering a loan. For example, a person has a low score and he has recently got a promotion, which has increased his monthly salary by a huge margin. In such a scenario, the lender may approve his loan based on the salary or income, instead of just the score. If you haven’t as yet, ask for a copy of the credit report now.
Understand the total cost
It is important that you evaluate and understand the total cost of the car loan, instead of just the face value of monthly installment. Most people make the mistake of checking the final monthly cost of the vehicle and often end up signing papers instantly. When you compare car loan rates, you have to understand the Annual Percentage Rate. The lower the APR, the better is the deal. Also, it is significant that you consider the duration or term of the loan. Long term car loans, extending over a period of five years, can lead to negative equity on the vehicle. Basically, you will be paying more than the value of the vehicle in overall interest payments.
Bad credit or not, you have to choose the right lender. Keep in mind that expensive car loan rates can have an impact on finances for a considerable amount of time, and the loan can be a burden instead of a boon. There are some amazing online auto financing companies that can help you in getting the loan approved without spending your time and energy. All you have to do is fill an online form, based on which they will give you the options. As long as you have a minimum income stated by such services and a valid license, you can get the loan.
Finally, don’t miss on spending some time on the car options. Just because you can get a loan doesn’t mean picking a vehicle with a better price or more features. Look for a car that’s not just affordable but also functional for your needs. At the end of the day, it is an investment for next few years!