Car Loans: How to Apply for a Car Loan and Financing

Applying for car loans is essential to purchasing new and used cars. The best approach is to learn about financing options prior to walking into a dealership. Car loans can be acquired online through reputable banks and credit unions. You may also finance new and used cars at the dealership. A number of smaller online companies offer loans but beware of giving them your social security number and date of birth before verifying their site. If you enter a dealership with a pre-approved car loan from another lender, you’ve increased your negotiating power.

Industry consensus agrees that car loans have recently become easier to obtain. Car financing is available with longer repayment terms, lower mandatory credit scores and optimum interest rates. Know your credit score before applying online or at dealerships. If your credit score has been torpedoed by job loss or illness, you might consider repairing it before venturing into the loan market.

Applying for online car loans is surprisingly easy. Just open up Google and type in, “how to apply for a car loan online.” A number of major banks come up, including Bank of America, Wells Fargo and Capital One. Once you select a bank, click on the link to receive detailed information on loan rates, loan types and eligibility requirements. Most online applications will give you an answer within minutes. This is an easy way to apply for car loans.

Even though online applications are easy and give you negotiating power, the simplest way to apply for a car loan is through a dealership. Dealerships exist to serve customers and to sell cars. Be prepared with your credit score so you know you’re standing in the credit market. Credit scores determine interest rates. If you have an excellent FICO score, 720-850, you’ll be able to obtain the lowest interest rates with minimum down payments. “Ideal” credit scores for a car loans have been fluctuating in recent years due to tight credit markets.

The best car loans are negotiated by entering the dealership with pre-approved loans from banks, credit unions or outside lending companies. Typically, the dealer can match and offer better interest rates than other lenders. Dealers use their manufacturer’s finance company and the dealer receives a commission on each car they help finance. They have a powerful incentive to finance your car.

Currently, it’s a great time for car loans. Manufacturers such as Mazda, Hyundai, Toyota and GMC are offering financing beginning at 0% interest. The best financing is found in models that are about to be redesigned. If you research available models, you may find 0% financing with six-year terms.

After four years of very tight credit, the car market is opening up and dealers are offering incentives and rebates as well as 0% interest. If you’re prepared to purchase gas-guzzlers (such as trucks and SUV’s) you can be confident of finding good interest rates with long repayment schedules. It’s a great time to acquire low interest car loans on new or used vehicles.

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