Shopping for Your Car Loan or a House – The Process is Similar
We all have been there. If you are shopping for a new house or a new car, the steps embedded in this process to get an approval are very similar. In this short article I will show what I would do when in the market for a car and need to finance my new ride.
I have lined out this 5-steps process, which should give you an idea what to prepare, what to look at to get indeed the best dealer when shopping for your car loan.
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Always – Know What Your Credit Ratings Look Like
Depending on your FICO score and the attached credit ratings this is crucial for qualifying for any loan approval. You should pretty much know if you had down the road to build a stellar credit ratings any hiccups like late payments on current car loans, skipped payments of open credit card balances. Late on the mortgage or may have a collection luring around from i.e. medical bills or similar. Before you step into a car dealership, may sign up for credit report websites like Credit Karma or Free Credit Report and take a look what the 3 credit bureaus (Experian, Equifax and TransUnion) show your FICO score is saying.
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Prepare Documents to Bring With You Visiting Your Dealership
All Finance companies require somehow a proof of income or residency, when applying for a car loan. Even so you may have filled out conveniently an online credit application on a dealership’s website the proof that you told the truth in regards of annual income, debt, house payments, and time spent in your residence – the banks want to see at least a glimpse documenting everything submitted matches the documents provided. Therefore I’d bring these documents to my dealership appointment:
- my last 2-3 recent paystubs
- the loan documents or the lease of your residence
- a current cable TV or utility bill of my residence
- the title of my current car I want to trade-in, or
- a pay-off quote from your current car loan lender, good for 20 days
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Know What You Will Be Able to Afford
Let’s be clear. You need t know what you can afford and what you can’t. When you had a car payment of $500 per month, but now it is time to trade in this old honker before may be expensive maintenance or repair will occur, ask the question: “Am I okay with the $500 or a bit more per month to pay form my new ride or was it sometimes already hard to keep current on the monthly $500 payments?”
Before you begin to shop for your car loan you need to understand you situation and the assets you have. It is your responsible to reflect what is feasible and how much of a car loan you can afford.
I’d start to add up my collateral. That would be my monthly rent/mortgage payment, the current car payments plus the insurance, my utilities, cell phone bills, may be child support or alimony you have to pay, my credit card payments when there are balances to take care of…think of what you spend just for leisure such as going to the movies, going out for dinner, your Starbucks addiction…you get the gist.
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Research Your Bank Rates and Talk To Your Dealership’s F&I Department
You may have one or two bank accounts. May be one with a regular bank and the other one with a Credit Union. Talk to your banker(s) what they could (and I said could) do for you in regards to car loan, interest rate, payments, loan amounts and duration of the loan. Get an offer and do not just sign on the dotted loan for an approval. With this printed out quote, go to your dealership and speak to the F&I department. Most of customers don’t even know about the possibilities car dealerships have today to obtain even better rates than the rates you just received from your bankers.
For example, the Finance Departments here at Tacoma Dodge, Tacoma Nissan and FIAT and Alfa Romeo of Tacoma are working currently with more than 70 Banks, Credit Unions and Financial Institutions together to guarantee the car buyer with the best rate possible.
Let me know if you have further questions in regards to this article. I will be more than happy to set you up with one of our Finance Managers to provide you more details. When you are ready to take the next step and start car buying process visit our virtual stores and website at
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