I know more about home loans but car loans are important to know about too. It is good to know, that you can qualify for a car if you own a house; but you can‘t always qualify for a house if you buy a car. If you are thinking about buying a house make sure the car loan will not get in the way of a great place to live. 

Get Your Credit Report

The very first thing you need to do is get a credit report. This is also the first thing you do when you are buying a house. Understanding your creditworthiness will make a huge difference in how you will be able to negotiate the price of the car and the interest rate on your loan. You can get a free report once a year from your bank or credit union. The internet is also a good place to get a report but this type of report does not always have all the information on it. But it will give you a good idea about your FICO score. The higher the FICO score the more leverage you have. Lenders will never give you a rate that is way below par, but at least you will know what the banks will offer, and if the car dealer‘s rate is competitive. The dealer makes money on the higher rate you agree to pay, so be careful with the rate they offer you. 

Shop The Rate

The next step is to shop the rate. Compare the dealer‘s rate with the bank or credit union. The dealer will offer you add-ons, such as paint sealant, extended warranties, anti–theft devices and more. The bank will offer only the cost of the car less your down payment. With this information you will be able to calculate the cost of the additional items that are being added to the loan cost. You may want an anti–theft device but you could go direct to the providers of this services and it may cost less than the dealer‘s costs. 

Most people shop for a loan in the evenings or on the weekend. The lenders are not open during those hours. But you can negotiate a deal at these times. The car dealers want you to drive the car off the lot today. They will have you sign a contract “contingent on credit approval” and days later they can notify you that the lender did not approve your loan at the rate negotiated. They will give you the loan at a higher rate, but you can keep the car if you agree to the higher rate. This is called “on the spot delivery“. Be aware there is no rule that compels you to sign a contract today. Take it home review the contract, add the numbers and make sure you are happy with the cost. Always make sure the terms of the contract will remain the same at the terms offered in the contract the next day. 

In Review:

1) Know your FICO score and your creditworthiness.
2) Know how much you can qualify for. Make sure you can make the payments over time.
3) Get a quote from your bank or credit union. You will be better able to negotiate a good deal.
4) Read the contract. Ask questions. Be a smart consumer. 

Be smart, be informed and negotiate a great deal on a car. If you know anyone that is thinking about buying or selling a house please call me I would love to help them.