Steps to Take Before You Apply
CarBuyingTips.com has compiled a list of the key steps you should take before you apply for a car loan. The last thing you want to do is think that all you need to do is fill out an online application and you're done. In order to make sure you get the lowest possible rate, you need to do some homework here folks!
- Get your Credit Score from all 3 bureaus so dealers can't lie to you about your score
- Start comparing online rates from sites like LightStream to rates at dealers
- Close old credit accounts, they are excess luggage dragging down your credit score, but leave your oldest account open
- Remove erroneous previous addresses and other errors off your credit report before attempting new car financing
- Wait until your score goes up to 680
How to Increase Your Chances of Approval
- If you're a recent college grad, don't apply for a loan until you're at your new job at least 6 months
- Your monthly income must be over $1600 otherwise you have no business taking out a loan, buy a used car instead
- It helps if you have financed a car your past credit history. Some lenders may reject you if you don't
- Pay down your credit card balances as low as possible, payoff higher APR cards first before applying
- Don't apply for a loan if you have bad credit, moved in the last 6 months. Lenders hate nomads, they verify addresses & income
- Get a stable job with a consistent paycheck. Self employment is very difficult to get approved
- Haggle with creditors to get charge offs, late payments, other black marks off your credit report before auto financing
Credit card companies say it takes 60 days for paying off your credit cards to show up on your credit report, but who wants to wait 2 months before buying a car? One of our visitors filed a request for investigation of her report stating that the balances on these cards were incorrect, and the investigator looked up her correct balances. She checked 2 weeks later and it was changed. Also, by paying off 2 credit cards from 70% max credit level down to 0%, increased her credit score 100 points. That's the difference between paying 6% APR and 21%.