What You Need to Know About Car Loans

by : Jason Cruz

Thinking of applying for a car loan so you can buy the car of your dreams? There are some general items to take into consideration if you want to obtain the most affordable deal when buying a new car. Typical car buyers want the best offer when haggling with the car dealer, and it is best to be armed with information even before stepping foot in the dealer's shop:

1. Is Your Credit Score Good Enough?

The average credit score is 723. Any score above 700 may very well give you an advantage when applying for a loan. Basically, a credit score is a number from a person's credit report that lenders use to evaluate a lendee's capacity to pay off a debt. A higher credit score will allow an individual to benefit from a lower interest rate on a loan. There are online services where you can easily obtain your credit score for free.

2. Compare Car Loan Quotes - Look at the APR

An APR, or Annual Percentage Rate, is the percentage of the amount loaned to the borrower. The APR includes all the fees/charges inherent in a car loan. When shopping for a suitable car loan, people usually take a peek at the APR in making a decision. A lower APR is usually the better deal when confronted with multiple car loan quotes with the same loan terms (the loan duration).One thing to be mindful of also is that a loan term with a longer duration may not be the most cost-effective since longer-term loans have much higher interest rates.

3. Canvass Prices for New Cars - Online portals such as Free Car Loan Search provide prospective car buyers access to services that can feed them instant car price quotes on popular, top-selling car models. It is always a good idea to get a good picture of current car prices before negotiating with sweet-talking auto dealers.

Buying a new car takes patience, determination and common sense. A brand new car, regardless of its price, is a valuable investment and consumers who are not informed may end up with a deal that will burn a hole in their pockets. Familiarizing yourself with the basics is a wise first step indeed in your auto purchase.

Apply for a online where you can immediately receive quotes from several lenders offering their best rates.