How to Finance the Best Car Loan Possible: 4 Crucial Steps

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How to Finance the Best Car Loan Possible: 4 Crucial Steps

Posted on December 14, 2022

Nobody wants a bad loan, but lots of people end up with one none the less because they don’t know the secret of getting the best car loan. That’s why we’re here today, because in this article you’re going to learn the secrets of getting a good car loan which will save you time and money.

 

Understand your Credit Score

 

The first thing you need to understand, long before you actually apply for the auto loan, is the importance of your credit score. Your credit score is a number that reflects your credit history and health and it’s the number that lenders are going to check when they’re Determining what loan you can be granted and what interest rate to give you.

 

 

You want your score to be as high as possible, at least above 750 which is considered the “good” range so that’s what you should be aiming for before you apply for a loan.

 

 

Get Pre-Approval

 

Speaking of the application, one thing that will greatly improve your chances of finding the best car loan is pre-approval. Pre approval is essentially applying for the loan before you buy, or even look at the car, and it has a few distinct advantages. 

 

For one it makes the process of buying the car quicker and easier since the loan is already sorted, but lenders like it when you get pre-approval and will give you better rates when you do so.

 

Minimise Loan Terms

 

One of the most important factors of your loan is the term, which is how long the repayment period is going to last. To simplify it the longer the term, the lower your monthly payments will be as you're stretching out the amount of payments you're making.

 

 

However the trick here is that longer terms and lower payments actually means you pay more in the long run because of the interest.

 

Interest is added to the loan on a monthly rate, which means by adding months to the term, you're also adding more chances to build up interest.

When you go to get your loan you want to aim for the smallest term that you can feasibly afford, it may squeeze your budget in the short term, but in the long term you’ll be saving lots of money.

 

Maximise Down Payment

 

The final point is technically also the first point. A down payment is a chunk of the car's total value that you pay before the loan starts, and since the loan is taken on what’s left after the down payment, you want to take as big of a chunk as you can. Money paid with a down payment is money that can’t generate interest which means the bigger you can make the down payment, the better.

 

These are the 4 biggest actions you can take to secure the best car loan possible in Canada. Hopefully this helped! If you're ready to finance your next car loan in Southern Ontario, we'd love to help make that possible. click here to get pre-approved online in minutes.