Today we announced how lenders can take steps to prevent discrimination in auto lending, but there are also steps that every consumer can take to make it more likely that they are getting a good deal on a car loan. If you’re shopping for a car loan, you’re not alone. The average loan for a new car is up to $26,691 – making auto loans an important decision for consumers.
Shop for a car loan before shopping for a car
When you decide to buy a car, there are several options when it comes to getting a loan. You can check with several banks, credit unions, or other lenders to get a pre-approved loan. Get that pre-approval before you go to buy a car and take the pre-approval with you when you go shopping. Having a loan offer in-hand when you shop for the car puts you in a strong position. For most people, concentrating your applications in a short period of time can minimize the effect on your credit score. Any negative effect will be small while the benefits of shopping around could be big.
When comparing loans, make sure you’re comparing all the terms
If you get competing offers from different lenders, including a dealer who offers you financing, you should take a close look at each of the loan terms, including the interest rate, amount financed, and length of the car loan. Some lenders may tell you they can tailor the monthly payments to suit your budget, but that could mean extending the lifetime of the loan. That could mean that you would still owe on the car when you are ready for your next car.
It’s hard for you to know how your interest rate and other loan terms stack up against other consumers in similar situations. Our announcement today is part our effort to protect consumers from unlawful discrimination. You can be a savvy buyer, though, by taking easy steps to negotiate the best deal for yourself – starting by shopping for a car loan before buying the car.