Auto Loans

For most consumers, a car represents the second most expensive purchase they’ll ever make. With this in mind, we have a few suggestions that, if you follow them, could save you hundreds of dollars on auto loans.

The first step in the auto loans process is to check your credit history and know your FICO score. There are a number of services, some owned by the credit bureaus, themselves, that will, for a monthly fee, furnish you with a free credit report and credit score. You are also entitled, by law, to receive a free credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) once a year. By timing these reports to receive a report from a different bureau every four months, you can cover an entire year at no charge. Although these reports will not contain a FICO score, there are a number of web sites (such as creditkarma.com) that will furnish your credit score to you at any time for no charge.

The next step in the auto loans process, if possible, is to arrange your financing in advance. By comparing the interest rates at local banks and credit unions, you’ll have a good idea of what the current market rates are. Getting pre-approved for an auto loan means that this is one item that can be kept out of the negotiating process at the dealership. If the dealer offers you a better rate you can take it. If not, you have your pre-approval to fall back on.

Finally, you should only pay for the extras that really make sense. Rustproofing in this day and age is a waste of money as is window etching and paint protection. On the other hand, if you’re purchasing a used vehicle or if you plan on keeping a new vehicle past the manufacturer’s new car warranty period or you drive a lot of miles, an extended service contract might make sense.