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What you need to know before getting a car loan

  • Written by NewsServices.com

Getting a car loan can be exciting, but also a bit intimidating if you're not sure what to expect. Knowing all the facts and numbers can help you make your decision, so here's what you need to know before getting a car loan.

If you don't have money saved up, or if you want to buy an affordable used car right now, then taking out a car loan makes sense. Here are some tips to help you get the best car loan for your needs.

Figure out how much you can afford

The total cost of buying a car is much more than what you see on the sticker price. When buying a car, there are several factors that influence the final price tag, including the interest rate (APR) that you'll pay, other costs like taxes and registration fees, and the length of your loan.

When deciding how much to borrow, first set a limit based on what you can afford for your monthly payment. The general rule is that you should spend no more than 30% of your annual income on a car. It's a good idea to work out both how much you want to spend in total as well as how much you can afford to pay in monthly repayments.

Not all lenders are created equal

When it comes to looking for your best car loan options, it's crucial that you shop around. It's important that you compare the APR, fees and terms of several car loans before you decide on a lender. A huge difference in any one of these costs could add up to hundreds over the life of your loan.

One way to get an idea for different lenders is by checking out online car loan calculators or getting quotes online (but make sure that these quotes aren't leaving a record on your credit score!). In addition to seeing what you can afford monthly, look at your total loan cost over the entire loan term as well as how it affects your credit score.

It’s also a good idea to consider all different types of lenders. If you’re after a specific car, for example an Isuzu, you could contact your local dealership to see if they have any low Isuzu finance rate options available.

Decide on what type of loan you're after

Depending on a few factors like whether you're buying a newer or an older car, you'll need to think about whether you want a secured or an unsecured car loan. A secured loan is tied to your car as collateral. If you don't keep up with your payments, the lender can repossess and sell your car in order to recoup their losses. An unsecured loan doesn't involve any security on the part of the borrower; it's more expensive than a secured loan because there's less risk involved.

Take your time

The absolute last thing you want to do is to rush into a loan that you can't afford or take some big hits to your credit score by applying for lots of different loans. The best way to get the car loan that's right for you is to take your time.

Check out which lenders are offering up competitive rates, and make sure that once you've chosen a lender, you read all the terms and conditions of your loan agreement carefully before signing on the dotted line!