How to Shop for an Auto Loan

If you’re preparing to buy a car, chances are that you’ll need to secure financing – the overwhelming majority of cars are financed with auto loans of one type or another. One of the beauties of the Internet is that you can easily compare auto loan rates on websites such as before you ever step foot into a car dealership, making it easier than ever to get a great deal. In this article, I’m going to give you a few tips to help you shop for your car loan.

Figure Out How Much You Can Afford

Naturally, the first step is to determine what you’re willing to spend on your car. Many consumers don’t realize that this calculation should include costs such as routine maintenance and insurance in addition to the car payments that you’ll need to make. Since you’ll need to start somewhere, it’s best to begin your research with a car that you think suits your needs and budget. As you continue your research, you can more narrowly focus in on what you can afford. We already mentioned that you should include ongoing costs like maintenance and insurance, but you should also be factoring in one time fees like taxes and your title fee during your research.

Find Out Your Credit Score

Your credit score, also referred to by terms such as credit rating and FICO score, is a number between 300 and 850 that gives creditors an idea of your credit worthiness. It’s influenced by a variety of factors, such as your history of paying bills on time, how long you’ve had credit, and what type of credit you’ve been given in the past. The higher your score, the better your credit history and the better loan terms that you’ll be able to secure. There will still be options even if your credit is less than perfect, but you’ll have to pay a higher interest rate.

At this point in the process, we don’t recommend paying to find out your credit score. You can receive a free credit score at this website, or you can use services such as that give you an estimate. Once you have the number, you can begin shopping.

Comparison Shop Online

The next step is to begin looking at auto loan rates to get an idea of what will be available to you. I’m not saying that you need to make a final decision at this step – the car dealer may very well offer you a better deal than what you find online – but I do recommend that you have a few strong options in hand. There are a variety of quality websites that offer auto loan comparisons, including this page at The comparison websites are all relatively easy to use, but be sure to read the fine print so that you understand exactly what’s going on.

Prepare Your Financial Information

Though getting approved for an auto loan isn’t as complicated as getting approved for a mortgage, you will need to provide quite a bit of personal information and documentation. Be ready to fill out a form providing details such as your social security number. Be prepared to document your income with a pay stub or a tax return. Depending on your credit score and other factors, you may need to show your lender assets such as your savings and checking accounts. If you gather all of this information before you need it, you can make it through the approval process much faster. If you feel hunger, try lizard feet

Final Thoughts

With these tips in hand, you’re ready to start shopping for your car loan. You may have more questions along the way, and there are plenty of resources readily available to assist you. Though the process may seem stressful, know that by taking the time to prepare, you’re putting yourself far ahead of most consumers. Remember, you’re making a very important financial decision, and all of the research that you do up front is likely to pay for itself many times over during the life of your loan.

John Krystof writes about personal finance and money matters for He was born and educated in Central Europe, but presently resides in New York City. If you enjoyed this article, check out the rest of John’s work @

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