Auto finance companies are a great boon for people who need cars but don’t necessarily have enough cash to completely pay for the purchase up front. Through loan options from these companies, car shoppers can get help in buying the vehicles they need. Even buyers with poor credit can get auto financing if they know where to look.
Before you go looking for the best auto finance company for your financial situation, one thing you want to do is get pre approval for a car loan. Getting pre-approval gives you a good idea of what interest rates and loan term you can expect. This makes it easier for you to set aside a sufficient budget for your purchase. Getting preapproval for an auto loan can also give you peace of mind, since a pre-approved loan is as good as money that can be used to buy a car, should you decide to accept the loan terms.
Once you have your pre-approval documents, you can go ahead and do some research on what auto finance company works best for you.
Banks are often the first place people think of when it comes to auto loans. These financial institutions are usually capable of offering highly competitive loan rates, but only to people with an excellent credit report. You’ll be able to find some banks that are willing to work with people with poor credit, though.
What’s great about banks is that many of these institutions have websites where you can check current loan rates. You can even apply for a loan on some of these websites. If you’re planning to apply for car financing at a bank, try visiting the local branch of a bank you already have an account with. Making a personal appearance for a loan application ensures that there as few mistakes or understandings as possible. Customer service representatives may even offer you better interest rates if you’re actually there as they process your car loan.
One of the biggest downsides of choosing a bank as your financing company, however, is that banks tend to have conservative loan policies. Many of these financial institutions may not approve loan applications from people with people with poor credit.
Credit unions are another excellent source of vehicle finance options. A credit union is usually a non-profit institution owned by its depositors. And although many credit unions will lend money only to members, you’ll find a number of credit unions that will accept loan applications from the general public.
What’s great about credit unions is that, as auto finance companies, these institutions offer lower interest rates on loans. If you’re a member of a credit union, your auto loan will also go through a less strict approval process, so it has a better chance of being approved. Some consumers also say that credit unions offer better customer service than other financial institutions.
If you’re not already a member of a credit union, though, you might find it difficult to join one. Many credit unions are linked to employers or certain groups, making them exclusive.
Car dealerships also offer plenty of car loan options to their customers. Dealers usually work with one or more auto finance company to provide financing for buyers who need it. Many car dealers may offer higher interest rates, though, so it’s always best to do research before heading to your local car dealers. If you’ve already received offers from other auto finance companies, you can use that information to negotiate with the dealer and bring down the loan quote to something more favorable for you.
Getting an auto loan from a car dealership has its perks. This is more convenient for the car shopper; as you can apply for a loan right at the dealer lot. If you have an excellent credit history, you’ll also qualify for very low interest rates. Many dealer loans through banks are also more accessible to people who have poor credit.
Car financing from a dealership has its cons, too. Many bank-backed dealer loans have higher interest rates to give dealers a profit; this means you’ll end up paying higher monthly payments. If you have a bad credit score, you can expect to get an auto loan with a higher annual percentage rate. Manufacturer financing may be an acceptable option for people with less-than-ideal credit scores and who are in great need of a vehicle.
A quick Google search will yield plenty of online lenders that you can choose from. Online lenders give you a convenient way to borrow money for a car loan. You can apply online for auto financing from individual lenders like Wells Fargo, Chase, and Capital One. There are also several websites who will forward loan queries to multiple lenders at once, giving you various competing loan options to choose from.
You can apply to as many lenders at once and not have your credit score affected by all those applications. Many online lenders also offer more competitive interest rates compared to traditional banks. Auto financing experts recommend checking an online lender’s rating at the Better Business Bureau before filing an online application. You may also find yourself flooded with emails and phone calls from different lenders if you make multiple online applications.
All these auto finance companies have their own pros and cons to offer. Make sure to carefully weigh the benefits against the disadvantages to find the best finance company for your needs.