Find out what you can afford
Take out a piece of paper and create a practical budget that shows you how much you can spend in terms of monthly payments. Keep in mind recurring expenses such as insurance, repairs, and electricity. Next, calculate the cost of your down payment or the value of the car you want to trade-in.
Review your credit score
Before speaking with lenders, it’s a good idea to know what your credit score is. You can check your credit score for free on some websites and you can also pay to get your credit rating from leading credit bureaus. Auto loan lenders base loan terms and interest rates on credit reports and ratings. The better your credit rating, the better your chances of securing a lower interest rate.
Compare lenders to find the best loan terms
Terms and rates differ between lenders. To get a quote, contact many lenders, including credit unions and your bank. The dealer can also have financing, but if you shop for the best loan rate before going car shopping, you’ll be able o negotiate.
Get pre-approved
Getting pre-approved for a loan ensures you’ve defined your financial boundaries before visiting a dealer’s showroom. Pre-approval does not imply that you have made a decision, but it does provide you with an amount you’ll be able to afford.
Find your car
It’s now time to pay a visit to your favorite car dealerships. Once you find the car you want, you can provide your lender with the year, model, make, and VIN (vehicle identification number). You can also get auto insurance immediately. Most dealerships won’t let you take the car away until you provide evidence of auto insurance.