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What to consider before getting an auto loan

If you’re getting ready to apply for an auto loan, you should take certain steps beforehand. Taking out a loan is a big deal, so it can be beneficial to think everything through before signing on the dotted line. Here’s what to do.

Pay Down Debts

If you have outstanding debts, pay them off as best you can before applying for an auto loan. Paying off your debts will boost your credit score, which will get you better rates when you do start shopping for a loan.

Credit Check

Make sure you check your credit report for any inaccuracies. Incorrect info could be dragging down your score and costing you plenty on the loan.

Total Loan Cost

You want low monthly payments on your loan, but that’s not the only number you want to think about. Consider the total cost of the loan and the interest rate. While low monthly payments are nice, if you can pay more, you’ll pay off the loan quicker. Do the math to see what monthly payment you can afford and don’t just immediately accept the loan with the lowest monthly payment.

Shopping Helps

Be sure to shop around for the best auto loan offer available. Get at least three different quotes and choose the loan that best fits your finances and driving habits. While a one or two-percent difference in interest rates might not seem like a lot, it adds up over the lifetime of the loan.

Chris O'Shea

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