We at New York Auto Approval Center do not want to see car buyers struggle with getting approved for an auto loan when things can be easy. The following are some practical tips we believe can help you as you go through the process of taking out an auto loan.
#1: Find out how much you can afford to pay for a car every month before applying for an auto loan.
#2: When setting your budget, do not forget to factor in the actual ownership costs like fuel, parking fees, maintenance and repair, insurance premiums, and warranty.
#3: Get auto loan quotes from at least three different lenders in New York City. Consider taking the one with the lowest APR or annual percentage rate, NOT monthly interest rate.
#4: Use an auto loan calculator when comparing auto loan quotes. It’s a great tool that helps you see the big picture of an auto loan offer.
#5: Compare the fees as well. In the case of dealership financing, some fees can be negotiated out especially if they are not really necessary. The law allows lenders to charge only certain fees. Find out which fees are allowed here in NYC.
#6: Do you have an existing relationship with a bank? Are you a member of a credit union? Check their auto loan offers as you begin to shop for car loans. They can give you low interest rates and perhaps other perks for being a member or a loyal customer.
#7: Do not rush. Making decisions too quickly can just lead you into a costly deal. Take the time to carefully think about every decision during the process.
#8: Avoid taking out a long auto loan. Do not be attracted to the low monthly payments it carries because it actually makes you pay more interest, making the deal costly in the end.
#9: Watch out for prepayment penalty. A prepayment penalty is charged when a borrower pays off the loan ahead of the schedule. The corresponding amount can be hefty. So if you’re planning on paying off your loan early, consider the savings you’re anticipating to keep versus the prepayment penalty. In any case, make sure the loan agreement does not have prepayment penalty clause before signing it.
#10: Interest rates on used car loans are higher than what is charged in new auto loans. Keep this in mind when deciding on what type of car to buy.
#11: You can get an auto loan from banks, credit unions, dealerships and online. Check out the offers from these providers when comparing auto loan rates.
#12: The ideal down payment is 20%. But if you pay a bigger down payment, the lender can reduce your interest rate or guarantee your approval. A bigger down payment gives lenders more confidence about your capability to repay the loan on time.
#13: If this is your first time to take out an auto loan or buy a car, read a lot. Research in the context of car shopping is not that hard these days especially with the availability of numerous resources online.
#14: The lending decision depends largely on your credit score, credit history, income and employment, among other factors.
#15: Do business only with legitimate lenders. You can verify the legitimacy of a lender by looking it up on the licensee search service in the website of Department of Consumer Affairs New York.