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Are you in the market for a new vehicle? Buying a car is one of the biggest investments that you will make, next to buying a home. Before starting the engine on your car buying process, there are three important things know about obtaining an auto loan.
Check your credit report first
Your credit score has a big impact on your ability to obtain a loan. The higher your score, the more likely you’ll be approved for the loan you want and the better your interest rate will be. You can request a free copy of your credit report once a year from each of the three credit bureaus by visiting annualcreditreport.com.
Get pre-approved, then shop
Getting pre-approved for your auto loan is a great way to ensure that you’re getting the best possible rate on your loan, and it’s an easy way to speed up the car-buying process. When you are pre-approved for a loan, the lender is agreeing to finance a car for you up to a certain amount of time, at a certain interest rate.
Apply for loans during a 14-day time span
Anytime you apply for credit, there is what is known as a “hard inquiry” made on your credit report. Multiple hard inquiries in a short period of time can lower your credit score. To minimize the impact to your score, complete all of your shopping around for the best loan deal within a 14-day period.
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