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Why You Need To Prepare Before Applying For A Car Loan

April 06, 2012 | Comments: 0 | Views: 112

So quite often what happens is someone walks into a car dealership and they fall in love with a car. Then they commit to buying it (and the dealership sales person is usually jumping up and down with joy at this point) then start talking about getting a loan. This puts the buyer in an extremely bad position which can either increase the amount they have to pay each month or even harm the chance they have to get the loan.

So here are some tips to help the everyday person be prepared which should give you a better chance at a good deal on your finance.

Look Up Interest Rates

This is vital and to be honest with you, this should be common sense but it is something that is often ignored. Before you step outside your door, look up the current interest rates in your country for car loans. I cannot describe exactly how to do this as it is outside the scope of this article but various search engines are your friend!

Armed with this knowledge you will have a base level to compare the finance offers to. Of course the interest rates will usually be higher than the figure you looked up (because the dealership has to make a profit) but there should only be a respectable mark up and not something silly like double the percentage.

Find Out Your Credit History

Using one of the many agencies out there, get a credit history report which should show you any red flags which may cause potential problems in your finance application. It can take two or three months to update these reports though, so bear this in mind when you get the report.

Calculate Your Monthly Repayments

Again, before stepping foot in the dealership, you need to have a good idea of what you will be paying for the particular car that you want.

For example; let's say you want a 2003 Toyota Corolla and the average price should be around $13,000. You should use an online finance calculator (or call up a finance company to give you a quote) to work out how much this $13,000 (minus the deposit) loan will cost you each month.

Is this something that you can really afford? Think about this strongly before falling in love with the car.

Get Pre Approved

Now this is slightly more work but you can get pre-approved from a finance company before you walk into the dealership. This will give you better negotiation options to at least match the other finance firm's quote.

Research Finance Terminology

To help you not get baffled with finance jargon (possibly leading to a loan contact that you may have not wanted), I recommend you do some research on the Internet about the common terminology used in automobile finance.

Writing for a New Zealand car dealership who also offers attractive financing options and you should click here in order to learn what is available and apply online for a pre-approved loan.

Source: EzineArticles
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