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How to Obtain a Car Loan

By eHow Cars Editor

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Borrowing money to buy a car isn't hard if you have two things - sufficient income and a good credit rating.

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Instructions

Difficulty: Moderate

Things You’ll Need:

  • Kelley Blue Book
  • Consumer Reports
  • Internet Access
  • Car Insurance
  • Car Loans

Step1
Choose your new set of wheels and negotiate a price with the seller (see 'eHow to Buy a New Car').
Step2
Research interest rates. Several Web sites, such as Bankrate.com, publish surveys of loan rates across the United States. Compare the rates with those offered by your local bank, credit union or car dealer.
Step3
Find out what your current car is worth as a trade-in. Research values in the Kelley Blue Book Used Car Guide, available at the library, your bank or on the Internet.
Step4
Determine how much of a down payment you can make. Use your trade-in value and cash - or just cash - to come up with the standard 20 percent usually required. Talk with the car dealer that has the new car you want.
Step5
Apply where you find the best rates, and the length of the loan and monthly payment fit your budget.
Step6
Consider saving more for a down payment or choosing a less expensive car if you don't qualify.
Step7
Build a better credit rating if that's what causes you to be turned down. Try again after six months of paying your bills on time.

Tips & Warnings

  • If you lack adequate income or a good credit history, lenders won't approve your loan until you prove you can repay it while meeting your other obligations.
  • If a bad credit history prevents you from getting a loan, contact Consumer Credit Counseling Service or a similar group.
  • Beware of for-profit imitators that promise to cleanse your credit history for a fee.

Comments

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stevecards

stevecards said

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on 12/11/2006 See how much of a loan you can get before you shop for a car and don't get hung up on buying a particular car. Being a cash buyer puts you in a stronger position with the dealer.

Also, rates are ususally better at a credit union, especially if you agree to move all your business. Check the membership rules, many are community charter, which means you can join if you live or work in the geographic area the credit union serves.

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