Build a Relationship With a Lender and You’ll Get Better Car Loan Interest Rates
Lenders are more likely to give a car loan to a buyer who they have a relationship with. If you’ve had a car loan in the past and made your payments on time, that lender knows that you’re a responsible car buyer and might offer you a loan or interest rate that other lenders won’t. This holds true with other lines of credit, like a mortgage or a credit card. When you’re shopping for a car loan, make sure to check with every lender that you have borrowed from in the past. Since they already know you, they will see you as less of a risk and give you a lower interest rate on your car loan.
When you’re shopping for a car loan, try to get all of your loan quotes in a one to two week period. If several credit checks are ordered in a short period of time, your credit score will only reflect one inquiry. If you spread out your car loan shopping over several months, this will negatively affect your credit score. Because each inquiry can potentially hurt your score, consolidating your credit checks will help keep your credit score up for future loans.
Sometimes lending agencies will penalize you for paying off a loan early. Because of this, it might not be worth it to put extra money toward the principal of your loan. Make sure you know whether your loan has a pre-payment penalty before you start planning to pay it off early.
Before applying for an auto loan, make sure your debt-to-income ratio is less than 30%. This means that the amount of money you owe should be less than 30% of your pay. Having all your credit cards maxed-out can lower your credit score and you want it to be as high as possible before you apply for an auto loan.
"Subject to financing" means just that. The deal is not complete until you’ve been approved for financing for your auto loan. You should never take a new or used car home, even if the dealer tells you to, until you are 100% sure you have been approved for financing. This prevents the dealer from calling you a week later telling you that your financing fell through and you need to bring the car back to them.