7 Tips for Getting the Best Auto Loan

When shopping for a car, one of the most important things you should consider is what your budget looks like and how you’re going to pay for your vehicle. For most people, some kind of auto loan will be necessary to afford a good car, but not all car loans in Edmonton are the same. The differences between a good loan and a bad or borderline-predatory loan can be significant. Fortunately, you have a fair amount of control over the options and terms you’re likely to get in your next car loan.

By knowing what you need to do ahead of time to get the best auto loan possible, you’ll be able to do the work and have a great experience figuring out your financing. Even if you’re in rough shape right now, the good news is that it’s never too late to start making some changes and get on top of things. Your next car loan might not be the best one possible, but if you keep making improvements, the one after will be even better.

Tip #1 – Know Your Credit Score

This might seem pretty obvious, but many people still overlook it as the best starting point when looking for a great auto loan near you. You can use numerous tools and services to find out what your credit score is from the major credit bureaus, and you can find this out for free if you use a reputable service. The most important thing is to not get too freaked-out, upset, or anxious about it—at the end of the day, your credit score is just a number.

It’s an important number when figuring out your next car loan, but still just a number. The goal here is to have information—knowledge is power for you as a customer, so get all the info you can. Your credit score will determine if you can get great terms for having good credit or if you’re going to have more of an uphill climb due to poor credit.

Tip #2 – Don’t Focus On Your Score Too Much

Yes, we just said to know your credit score, but don’t focus on it too much —don’t become obsessed. Your credit score is going to fluctuate a bit here and there—it’s completely normal, and checking it frequently while getting worked up about minor changes is a surefire way to stress yourself out. If you see a big change you can’t explain, that can be cause for concern; this can indicate possible identity theft, but minor changes aren’t a huge issue.

Your credit score is only part of the big picture for the kinds of terms you’ll be offered on a car loan. Just as important in many cases is your debt-to-income ratio. This is the percentage of how much money you’re earning that’s going toward paying off loans, credit cards, and any other debt you might owe. It’s something any lender is going to look at, and having low debt-to-income can be just as advantageous as a good credit score.

Tip #3 – Understand the Terms of Auto Loans

One of the most important things you can do is prepare yourself with knowledge, which extends to understanding how auto loans work. Take some time to research the common terminology used on paperwork for auto loans so that you’ll know what’s going on when someone is talking about “acceleration clauses,” “loan-to-value ratios,” and “positive equity” on a vehicle. These terms aren’t that difficult to understand, but they’re not particularly self-explanatory either, so it’s worth doing a little research.

Tip #4 – Work With Experts Who Can Help

Since knowledge is power—not just with finding great car loans but for just about anything else in life—the more you know, the better you’ll do in finding a great auto loan. Unless you have a lot of free time, however, it’s hard to put in the work to learn absolutely everything about the lending industry and all of its ins and outs. This is why it helps to have someone by your side who works with financing and auto loans every single day. At iDrive Canada, figuring out the best lending opportunities for people is what we’re all about and something we really believe in.

There’s nothing better than having an expert by your side to help you understand every detail and assist in navigating through complicated legal paperwork and financial considerations. This is true for anything, really, but considering you could easily be paying off a car loan for the next three years or more, it’s very important that you have an expert to help you get the best terms possible so that you don’t have a lot of regrets for the next few years.

Tip #5 – Stay On Top of Payments

Once you get your auto loan, the most important thing you can do is make every payment on time. Unless you absolutely can’t avoid it due to circumstances beyond your control, don’t be late or miss a payment. If you’re late on a payment, known as being “delinquent,” it can result in penalty fees and added expenses that you can otherwise avoid. Even worse, if you’re too late on a payment, your loan can go into default. This will hurt your credit score and make future auto loans harder to get.

If you really can’t help it and know you’re going to be a few days late on a payment, contact your lender. Admittedly, lenders don’t have a reputation for impeccable patience, but you’d be surprised at how reasonable they can be. They might have policies that allow for a brief, one-time delinquency without adding a penalty fee. But if you don’t contact them, they’ll assume the worst, and that’s bad news for you.

Tip #6 – Make the Biggest Down Payment

One thing a lot of people don’t necessarily think of is that the best way to keep your payments low is to require as small a loan as possible. The more you can pay upfront as a down payment, the less you’ll need to borrow, which means you’ll typically end up paying less in interest over the lifetime of a loan. You don’t want to stretch yourself too thin and end up in a bad situation, but otherwise, you should pay as much of a down payment as you can. In addition to this, get the most money you can for any vehicle trade-in you have, as this will also reduce the total amount you’ll owe and how much of a loan you need for a vehicle.

Tip #7 – Don’t Be Afraid to Haggle

It doesn’t matter if a dealership advertises “haggle-free pricing” or how straightforward they say they are—you should always try to haggle for a lower price. Use the internet—do some research on fair prices (especially when looking at used vehicles for sale), know what your trade-in is worth, and make an offer to several dealerships in your area. If one of them is willing to meet you at a low price, send that offer to the other dealerships saying you were offered that price and see if they’ll meet or beat it.

The worst a dealership can do is say no to a price you suggest on a vehicle. They’re not going to yell at you or tell you to get off their lot—they want your money, after all. So go ahead, shoot your shot, and see if they’ll accept your price. Even if they don’t accept it, they might still make a lower counter-offer than their asking price. You have nothing to lose and everything to gain, so go for it and get the best price you can to keep your loan as small as possible.