It’s exciting to choose a new vehicle and drive it home. But owning a car comes with a lot of responsibilities – and the first one is to pay for it. Did you make sure you can afford the vehicle? Did you get the best price? And what about your loan… Did you get a discount on your auto loan?
Although these questions can look daunting, we’re here to help! Follow the 5 steps below to get your car loan approved and get a discount auto loan.
- Establish the Amount You Need
Your first task will be to determine the maximum amount you are willing to pay (and can afford to pay) for your new car. One easy way to do that is to calculate how much you can pay monthly and multiply the amount by the number of months you want to pay over. Once you have the total amount, you are armed with the deal you can chase. Remember that this amount will have to include the interest rate you pay on the loan – the better interest rate you get, the more money you can put toward the actual value of the car. By establishing this amount first and foremost, you make sure you can drive your dream car for a long time without struggling with the payments.
- Do Your Homework
In order to get a discount auto loan, you will have to know what your credit score looks like. The higher your score is, the less the financial institution will see your loan as a risk. Therefore, it might influence the interest rate you are able to secure. You can easily access your credit history online from the two bureaus in Canada (Equifax and TransUnion) and make sure it contains no mistake. You can also get your credit score for a small fee. It might differ slightly from the one your institution will have – all calculations have different criteria, but it will give you a fairly good idea of your credit situation.
- Shop Around for the Best Deal
Getting a loan is like any other purchase you make – only this time you are purchasing money. You are totally entitled to shop around and select the institution that offers you the best conditions. Many aspects come into play: the down payment you make, the interest rate, the length of the loan… And going to your bank is not your only option! You can ask the dealership what kind of offers or incentives they have on financing, and you can also get an offer online by a broker that deals with multiple institutions and might be able to get you the best deal. Just make sure you keep your shopping condensed in a two wee period to avoid affecting your credit score. Those enquiries will count as only one and will seem less like you are desperately looking for fast cash.
- Read the Fine Print
Once you are fairly sure you found the best possible deal, make sure you calm down for a minute and read the fine print. Some elements to look for are prepayment penalties and missing items. Will it cost you money to pay off the loan early (if you sell the car or want to refinance at a lower rate, for example)? Similarly, make sure that everything the lender promised is written in the contract. Once your signature is at the bottom of the page, it will be difficult to add oral promises to the contract.
- Get Preapproved
Once you have decided on the best offer for your situation, make sure you get a preapproval. The institution thereby has an agreement with you and will freeze the interest rate on the amount of the loan for a given period of time (usually 30 to 90 days). Now you have all the time you need to shop for the car of your dreams without worrying about your finances.