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  • Writer's pictureAshley Van Rosmalen

Applying for a Car Loan: The Do's and Don'ts

Updated: Mar 3, 2023

Applying for a car loan can be an overwhelming experience, especially if you’re a first-time car buyer. It’s important to be aware of the dos and don’ts when applying for a car loan to make the process smooth and successful. In this article, we’ll provide you with some tips on the dos and don’ts when you are applying for a car loan.

Customer picking up new car after getting finance preapproval from broker

The Dos

1. Check Your Credit Score

Your credit score is one of the most important factors that lenders consider when evaluating your car loan application. Before you apply for a car loan, it’s essential to check your credit score to ensure that it’s accurate and up to date. A good credit score can help you get a better interest rate and increase your chances of loan approval.

2. Compare Options

It’s always a good idea to shop around and compare car loan offers from multiple lenders to find the best deal. Different lenders offer different interest rates, loan terms, and repayment options, so it’s important to do your research and find the one that suits your needs.

3. Know Your Budget

Before applying for a car loan, it’s important to know your budget and how much you can afford to repay each month. Consider your monthly income, expenses, and other financial obligations to determine your budget. Knowing your budget will help you choose a car that fits within your means and avoid overextending yourself financially.

4.Get Pre-Approved

Getting pre-approved for a car loan can give you an edge when negotiating with a dealer. A pre-approval can help you determine how much you can borrow and what interest rate you can qualify for. It also saves you time at the dealership, allowing you to focus on finding the right car and negotiating a fair price.

The Don’ts

1. Don’t Apply for Multiple Loans at Once

Applying for multiple car loans simultaneously can negatively impact your credit score and decrease your chances of loan approval. Each time you apply for a loan, the lender performs a hard credit inquiry, which can lower your credit score. Instead, research lenders and choose the one that offers the best terms and interest rates before submitting your application.

2. Don’t Choose a Loan Based on Monthly Payments Alone

While it’s important to consider the monthly payment amount, don’t base your loan decision on this factor alone. Consider the total cost of the loan, including the interest rate, fees, and other charges. A longer loan term may result in a lower monthly payment, but it can also mean paying more in interest over the life of the loan.

3. Don’t Ignore Additional Costs

When buying a car, there are additional costs to consider, such as insurance, registration, and maintenance. It’s important to factor these costs into your budget when applying for a car loan to avoid overextending yourself financially.

4. Don’t Overlook Repayment Options

Different lenders offer different repayment options, such as automatic payments, online payments, or bi-weekly payments. It’s important to consider these options and choose the one that works best for your budget and lifestyle.

Applying for a car loan can be a daunting task, but by following these dos and don’ts, you can make the process smooth and successful. Remember to check your credit score, shop around for the best deal, know your budget, and get pre-approved. Avoid applying for multiple loans, choosing a loan based on monthly payments alone, overlooking additional costs, and ignoring repayment options. Working with a finance broker can also help you navigate the car loan application process and secure the best financing options for your needs.

If you are interested in a car loan, we would love to assist you whether it is any questions you have or if you want to start the application process. Book an obligation free call with F&I Partners, so we can help you find the right car loan for you!


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