How to Get a Car Loan

Your credit score is a key deciding factor when it comes to getting approved for an auto loan. Financial institutions use your credit history to determine your loan’s interest rate, as well as the total loan amount. For example, a lower credit score may prevent you from borrowing as much money as you need to buy the vehicle you have in mind. You may also wind up with a higher interest rate (and higher monthly payments).

We recommend checking your credit score three to six months before you try to purchase a vehicle. My Credit Health, available within Greater Nevada Digital Banking, is free to all members offering a powerful one-stop-shop to access your credit score, credit monitoring, credit score simulator, financial tips, and more. All of this without impacting your credit score, and all online.

Get a sneak peek at your projected loan terms by applying for pre-approval. Pre-approval is a great way to expedite your application, as well check what kind of auto loan rates and total amounts you’re likely to receive. Getting pre-approved for a loan can give you more bargaining power with dealerships, and could save you the hassle of having to check out many different auto lenders if you are comfortable with the initial rate you’re pre-approved for.

You know how much you can afford. You know how much you’re approved for. All that’s left is the fun part: deciding what kind of car to buy. Using our free AutoSMART tool can help make shopping easier, with features for comparing important details and connecting you to local dealers.

Before you go shopping, we recommend checking your car loan requirements. Sometimes certain manufacturers or car types are excluded. For example, some lenders don’t allow borrowers to buy electric vehicles with their loans. This is also a good time to check for dealership requirements, where the lender may require that you purchase from a certain network of car dealers.

As you near the end of the application process, here are some key facts to consider about terms, repayment, and fees.

• Your lender technically owns your vehicle and will be noted as the lienholder on the title until you’ve paid your loan in full.
• Offering a larger down payment usually means lower monthly payments and less interest paid over the life of your loan.
• Be prepared to pay registration fees when you purchase your vehicle. If buying from a car dealership instead of a private party, then you’ll also need to be prepared to pay sales tax and any fees they charge (like a destination fee to transport your new car from another location as an example).

Once your application is finalized, it’s time to start driving–and start making payments. Making your monthly payments on-time is essential, especially for your credit score. A strong credit score will help you get approved for other loans (not just auto, but personal and home loans, too).

Failing to make payments, or making late payments, can negatively impact your credit score. Late payments stay on your credit report for seven years. If you miss several payments, your lender may turn your debt over to a collection agency or even repossess your vehicle. Setting up automatic payments can help ensure you’re always on-time, even when life gets busy.