Five Things to Know Before Applying For a Car Loan

Few purchases rank higher in your life than buying a car, perhaps second only to buying a home or starting a business. As often as you will use your new car to go to work, the store, your family’s home . . . the real need to own your own car also requires most of us to take out a vehicle loan.

At JJ Best Banc & Company, we know you may need to borrow the money you’ll need to start the car buying process by applying for online auto financing. The process can be easier when you are aware of sales tax, auto insurance, and a budget when you fill out the credit application. When it's time to sign your name having a plan for how to obtain and manage your vehicle loan should be just as important as the model and features you want in your future car.

Al Maranda, Finance Director at JJ Best Banc says, “Prepare before you seal the deal knowing auto loan rates, your ideal monthly payment, and our responsibilities as a borrower.” So, let's take a few minutes to find the car you want and the loan you’ll require and then be able to simply apply for online auto financing.

1. Know your credit score

How do you find out where you stand before you apply? That's easy. There are resources a-plenty to educate yourself on the details of your credit history and how to improve your credit score. “Your credit history will help you secure the maximum loan amount and the best auto loan rates, so know the likelihood of getting credit approval before you go for a test drive”, says Chris, Loan Officer at JJ Best Banc. You can access the three credit bureaus online for a credit report-TransUnion, Experian and Equifax or call/mail a request.

2. Apply for loans during a 14-day time span

Your credit score will slightly decrease when lenders check your credit history, keeping your application process within a two-week period will help reduce a negative impact. For this reason, having your vehicle loan plan in place before you visit the dealership will avoid having multiple hits to your credit. The "shopping period" is 14 days so all inquiries made during that time may be considered as one, reducing the hit on your score. Your credit score fluctuates based on your credit history and your current credit-related activity. (Try not to apply for a store credit card while you are also trying to buy a car!)

3. Get pre-qualified, then shop

“There is no better recommendation we have than to get pre-qualified for your loan before you shop”, says Ryan, Loan Officer.  “It's always best to go to the car dealership with financing already established.” Being pre-qualified guarantees that you have a loan to cover the cost of the car. Having done your online auto financing lets you focus on the vehicle choice without having to worry about the monthly payment. It also gives you the priority over others who don’t have approved financing. Of course, planning ahead allows you to organize your financing. Perhaps you do not have excellent credit, but being able to have a level of control over your loan rate, the monthly payment amount, or even negotiate a competitive rate based on your financial history by having a financing relationship can positively impact your loan terms.

4. Calculate budget before saying yes

It’s important to understand the elements that go into setting your monthly car payment. The APR (annual percentage rate) has a small effect on the amount you pay each month. Once you get to the dealership, you could get hit with extra costs. Sales tax will absolutely impact the bottom line as to the cost of the vehicle. If you include the taxes as part of the overall price of the vehicle, the sticker price won't be the same as the loan amount. Dealer fees that may be included in the price, as well as the cost of extra features. You could negotiate whether or not the vehicle includes some extras. “Before you say, "Yes," know when to say, "No," if the cost isn't within your budget, says Matt, Loan Officer. “Use an auto loan calculator to play with the numbers--- taking your time can save you thousands in the long run.”

5. Understand dealership financing

Sometimes dealership financing can appear to be a more attractive offer. Deals like 0% financing and large cash back rebates, which can ultimately reduce the total amount of your loan, may sound like the best option.  Remember that most financing options are only available to the highest qualified buyers. If you have anything negative on your credit report, a low credit score, or limited credit experience, you will likely not qualify for these specials. “Try not to settle for a lower monthly payment and long term—the amount of interest you’ll be paying will be far more to the term of the loan”, says Taylor, Loan Officer at JJ Best Banc. Also, consider borrowing an amount that allows your budget the flexibility to pay more than the monthly payment amount to help improve your credit score for the next auto loan after this one. Always remember to give yourself some wiggle room. Having a financing plan for your new car from JJ Best Banc is a great way to get the vehicle that you want and need without making unnecessary sacrifices. When you do your research, apply online car financing and get pre-approved, and run the math by yourself, you'll walk away feeling great about your car and your financial situation.

Ready to Apply for a Car Loan?—Apply online at JJBEST.com or call your personal Loan Officer at 800-USA-1965. We look forward to servicing you.