How To Get A Loan For A New Car In 4 Simple Steps

If you are planning to get a new car or a used one but do not have the cash at hand, you need to think about how to get a loan. Even before starting to look at dealers and cars, you have to get your finances right and do things in the correct order.

#1. Check your credit score

The first step on how to get a loan is to check your credit report. Your credit score determines what interest rate you will get and if you are eligible for a car loan in the first place. A fair credit score starts at 580. Having a score of at least 580 means that you are eligible for loans. Ideally, your score should be at least 650 to get better deals from banks.

#2. Compare different lenders

Car dealers will offer various financing offers but do not rush to sign anything. You need to compare various lenders to see what kind of interest you can get. It is not uncommon to get into a bad deal from the dealer. If you want to make sure that you get it right and learn how to get a loan the proper way, you should first consult multiple banks. You do not have to finance the car using the options provided by the dealer.

#3. Get preapproved

Assuming that by this stage you already have a shortlist of banks that you might want to work with, you should apply for a car loan. You can apply to multiple lenders. The goal is to get preapproved. If your credit score is decent, you should get preapproved on all your loan applications.

#4. Find a car

The last step is to find a car that you want to buy. Being preapproved means that you can start visiting dealers. Once you find the car, you can finalize the loan. This would be the final step of how to get a loan and get the car that you want as long as it is within your budget.