Getting A Car Loan From A Bank

Before you apply for a car loan, get a credit report, with your credit score.  You will have to pay for the credit score but is one thing you have to have.

Each credit bureau has a website and you can obtain your free annual credit report directly from the credit bureaus. Review the credit reports and make sure they accurately reflect your credit history. If there are errors contact the credit bureau and the creditor and ask that the errors be corrected. You will likely be asked for documentation of the correction. Keep working with the credit bureaus and the creditors until the error is corrected.

Type of Bank Car Loans

Once you are comfortable your credit report is accurate you are ready to begin your search for the best lender for your bank car loan. Banks like to lend money to barrowers who have a history of paying their debt on time. If you have some blemishes on your credit report or a credit score of less than 620 you will likely be classified by lenders as a subprime barrower and will pay a higher interest rate for your loan than barrowers with a better credit history and credit score.

Start with the bank or credit union you currently do business with.

Compare Bank Car Loans Interest Rates

Always get more than one quote so you can compare terms and interest rates. Make sure you are aware of all of the terms of the loans. For example, make sure there are no prepayment penalties. If you obtain a better interest rate down the road or sell your car before the loan is paid off you do not want to be penalized by having to pay a prepayment penalty.

Ask the lender if they will give you a better interest rate if you have the payments automatically deducted from your account. Many lenders will give you a lower rate if you establish automatic monthly loan payments.

As a general rule the higher percentage of the car’s purchase price you can put up as a down payment the lower your interest rate. If you can put down 20% of the car’s purchase price it is likely you will qualify for a lower interest rate. It may be worth it to consider a lower priced car to reach that 20% down payment level.

The keys to getting the best bank car loan interest rates and terms are:
•    Keeping a good credit score
•    Putting up a 20% down payment on the car
•    Working with a lender with whom you have a current banking relationship
•    Shopping around and comparing interest rates and terms