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How do I get a loan to buy a car?
I've lived in a city with good public transportation for a long time and haven't needed a car. But recently, I got a new job that requires a car because it's out in the suburbs. I can't afford a car outright, so I think I’ll need a loan. What’s the easiest way to get a loan to buy a car?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on the new job!
To get a loan to buy a car, you will need to:
- Check your credit score
- Figure out how much you can put toward a down payment
- Pick out the car you want
- Gather the necessary documents
- Research lenders
Credit score: Lenders will check your credit history to gauge whether they should approve or deny your loan application. Your credit score is also used to determine your interest rate. The better your score, the better your interest rate will be.
For example, 660 is categorized as fair credit. You will likely still get approved but may pay higher interest than someone with a good or excellent score. If you have bad credit, you will likely need a cosigner to qualify for a loan.
Down payment
: You’ll want to figure out how much you can pay up front for the car. Then, you’ll only need to take out a loan to cover the rest. The more you can pay, the better your chances of approval and the less you’ll spend on interest in the long run.Your car: The more specific you are with a lender about the vehicle you want, the better. They’ll want to know the year, make, model, and VIN (if possible).
Documents: Lenders will want to see proof of identification, your credit score and history, proof of residence, proof of insurance, and proof of income, among other things. Requirements vary by lender, so check with each for specifics. Being organized implies you’re serious and can help your chances of getting approved.
Lenders: Finding the right lender is essential. Shop around with local and national banks, credit unions, online lenders, and dealerships. Collect quotes so you can determine which deal works best for you.
If you are unhappy with the interest rate you qualify for, don’t worry. You can still purchase a vehicle now, then refinance into a lower-interest loan after making several on-time payments and improving your credit score. Refinance quickly and easily through the
Jerry
app. On average, those who refinance pay $85 less every month.View full answer
- Gregory R.
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