Buying a vehicle, and getting an auto loan to facilitate the purchase, can be the first significant financial commitment that many people make. It can be exciting to have your own transport and be liberated from crowded trains and buses, waiting times, and unpredictable schedules! Buying your own vehicle can give you an exhilarating sense of freedom but is also accompanied by some natural concerns for a first time buyer – how to find the best auto loans.
Tips for a first time buyer on how to choose the most suitable auto loans
The only way to make a decision is to thoroughly research the various loan offers available in the market. Some lender websites will allow you to do a quick online eligibility check to see what kind of loan you qualify for so that you can make your decision accordingly. It is important to be informed of the products and compare the features and benefits to determine which offer best fits your credit requirements.
Above all, do not rush the decision. Auto loans mean a commitment of several years and it is important to find both the vehicle and the loan offer that is most suitable for your needs.
What are the first steps when applying for auto loans?
First, it is important to obtain a copy of your credit report well in advance of applying for a loan to check your credit score and minimise the chance of rejection. In general, lenders look for a score of 750 or above to sanction a loan. You need to concentrate on improving your credit score to at least 750, if required. This can take an average of 4-12 months, depending on how serious your individual credit situation is. If you have a low score, you can spend time improving your score so that you become loan-eligible before you apply for a loan.
It is also useful to check your credit report for any errors that are needlessly dragging down your score. This could include any reporting errors - for example, showing a loan as being outstanding although you have paid it off in full. It is important to quickly file a dispute and get these errors rectified so that your credit score is not dragged down by these errors unnecessarily.
Once you improve your score and have a clean credit report, you stand a good chance of having your loan approved. A higher score also means you can avail of more attractive terms that will lighten your loan repayment burden.