Getting a new car is an exciting life moment, and it is even better when you can find auto financing that fits your lifestyle and your finances. Understanding the ins and outs of car loans can help ensure your purchase goes smoothly. It can also help you secure the best interest rates and terms.
At Capital Credit Union, we value financial literacy and ensure our members have access to the information they need to make healthy financial decisions. Keep reading for practical tips on how to secure the best car loan rates in Wisconsin.
Improve Your Credit Score
Your credit score impacts how much interest you will have to pay on your auto loan, with a lower score often resulting in a higher interest rate. Your credit score can also influence the type of loan you are eligible for. So, it’s best to know where you stand before you begin the loan application process. You can do this by checking your credit report.
If your credit score could use some improvement, consider taking some time to improve your score before applying for a car loan. While the current market will also affect your auto loan rate, you have more control over your credit score and can take steps to improve it. Things like making on-time payments and keeping credit card balances low can go a long way toward increasing your credit score and, in turn, receiving a more favorable car loan.
Compare Offers from Multiple Lenders
When you’re ready to start looking at car loan rates, it is a good idea to compare offers from multiple lenders. This will give you the opportunity to see the different rates and terms offered by lenders so that you can decide which one will work best for your financial situation.
It’s important to keep in mind that getting auto loan quotes or pre-approvals requires a credit check, and multiple checks from multiple lenders could negatively affect your credit score. However, if you can keep all of the credit checks within a short time frame, generally 14 to 45 days, they will be counted as a single credit inquiry, and your credit score won’t take a hit.
Shopping around and seeing what your loan options are is an important step. Compare different types of lenders available to you, the types of loans they offer, and the best loan rates.
At Capital Credit Union, we offer a variety of loan rates and terms so you can choose the car loan that works best for your financial situation and goals.
Get Pre-Approved for a Loan
Having a pre-approved loan before you head to the dealership makes the car-buying process a little smoother. Pre-approval serves a number of purposes:
- It can help you establish a budget when shopping for your new car. Pre-approval comes with an estimate of the loan amount you’re approved for and potential monthly payments so you can get an idea of how much you can afford to spend.
- A pre-approved loan gives you an advantage when negotiating an offer at the dealership. It shows the dealer what your buying power is and that you are a serious shopper.
- Pre-approval speeds up the process of securing the final loan. Since you’ve already submitted some of the necessary information to the lender, there will be less work when you submit the final application.
If you want to get a pre-approved loan, you’ll need to fill out a loan application and go through a preliminary approval process. If you’re approved, you’ll receive a pre-approval letter that you can then bring to the dealership.
Note that pre-approval isn’t a guarantee you’ll ultimately receive the auto loan, but it does mean your chances are better than if your pre-approval application is denied.
Know What to Look for in a Car Loan
The loan term is the length of your loan repayment period. With a shorter loan term, you repay your loan over fewer months. Typically, your payments will be higher with this option, but you will pay less in interest over the life of the loan. Longer loan terms, on the other hand, usually mean lower monthly payments, but because repayment is spread over a longer period, you will pay more interest in the long term.
When deciding what term will work best for you, consider your immediate financial situation and how much you are prepared to pay each month. You should also think about how soon you want to pay the loan off.
Interest RatesCar loan interest rates vary from lender to lender. They also vary depending on the loan term, the amount of the loan, and your credit score. If you have a high credit score, opt for a shorter term, or make a larger down payment so you borrow less, your interest rate will likely be lower. Lower credit scores, longer terms, and larger loans typically result in higher interest rates.
When you’re shopping around for the best car loan rates in Wisconsin, compare loans with similar terms and know your credit score and down payment amount for better accuracy.
Additional BenefitsFinally, look at the extra benefits offered by individual lenders. For instance, Capital Credit Union offers guaranteed asset protection (GAP), mechanical breakdown protection, and debt protection. You can also use the Capital Car Finder to search for the perfect vehicle.
Finding the best car loan rate in Wisconsin takes a little time and patience, but with these tips, you can find an auto loan that fits your needs. Improving your credit score, comparing offers from multiple lenders, getting pre-approval, and understanding what to look for will help you secure the best loan available to you. At Capital Credit Union, we would love to help you make the best financial decision and be a part of getting you on the road in your new car.