Auto Loans

We’re living in a time where credit is ever-present. Wherever you venture, especially if it is a store or business selling something, you’ll be offered credit to shop in said store. And that credit offer can come softly or be plunked over your head like some wacky kid with a bat. Reason why – Americans like credit, take on debt, and have been doing so for a long time now.

The first mass-produced car was the Ford Model-T. It was introduced in 1908 and originally cost $850. In present day dollars that comes to roughly $20,000. Prospective buyers in those days needed to save for many years to pay up that $850, and those who couldn’t were an opportunity for dealerships. These dealerships quickly figured out that by offering installment loans (with interest), if they picked the right borrowers they could make some nice money while also closing a sale.

General Motors later opened a special loan division and auto loans were officially a thing. The current lending market is comprised of car manufacturing finance companies, credit unions, commercial banks and ancillary lenders. Nearly every car brand has a financing office and the average car loan exceeds $30,000 with an average term of 68 months. Prior to taking on a loan the first thing to figure out is home much you can afford to spend. Like a home loan, strapping yourself into monthly payments that are going to stress you out and have you wondering how in the heck you’ll pay them off every month is not a good route to take. Next, call local banks and credit unions first. Some will tell you to hit manufacturers first, but local banks and credit unions will likely (not always) have the best rates.

Once you have a handful of quotes in place, you’ll quickly understand the lay of the land. The interest rates should not swing widely. You might find some diamonds in the rough, but an interest rate swing of over 5 percent from one lender to another is rare. Second, make sure your financial information is available, up to date, and ready to be presented. During the pre-approval process you will need to submit this information and for many here is where things can slow down – down to a snail’s pace if you’re not careful. Third, once you have been pre-approved for a loan, now comes the fun part – shopping! Take your time to narrow down the selections, carefully choosing the best makes and models for you. After that, you’ll want to sit back down with the lender and get their feedback. They likely won’t have much to tell you in terms of advice of which car to buy, that’s on you. But they could have some valuable information regarding previous borrowers and similar cars and their experience. This is invaluable information to be honest. Auto loan lenders have seen it all, especially the big boys and girls.

Picking the right auto loan these days is not rocket science. There are so many lenders that you shouldn’t have a problem getting a decent rate. Just make sure the terms are clear and that you can pay monthly and you’ll be just fine.