Car financing is a complicated subject for many of us, and we often want to just get it over with as quickly as we can. But patience can often be rewarded when it comes to financing. So how long should you shop around, and why?
Why You’ve Got A Time Limit
First of all, it should be noted that there is, in fact, a time limit on how long you can shop for a car loan, largely due to how credit scores are determined. Essentially, you need to get quotes closely together in order to preserve your credit score.
Why? Well, a string of inquiries close together is generally a sign that you’re becoming more of a credit risk. Often when people are looking for much more credit from multiple sources in a short period of time, that’s a sign they’re desperate and looking to credit to restore their finances. This would seem to be a problem when applying for multiple auto financing quotes, but fortunately, credit bureaus view multiple inquiries into your history from car loan lenders as one inquiry, limiting the effect on your credit.
That said, they do need to be close together or you may have multiple inquiries on your account. And, of course, any quote you receive will only be good for a short amount of time. That said, though, if you prepare beforehand, and use the right tools, you won’t have to worry about sorting through quotes.
Where You Should Take Your Time
The place to take your time is before you even apply. First, sit down with your budget and figure out what monthly payment you can fit into your budget. Next, look at what kind of down payment you can afford, or how much your trade-in is worth, which will reduce how much you need to borrow.
After that, research both the lenders available to you and lender networks. One of the distinct advantages of lender networks such as Federal Auto Loan is that you can submit to their entire network with one application, meaning you won’t have to fill out nearly as many applications. Similarly, you should be familiar with as many lenders as possible before you apply; ask family and friend who they’ve used, what their experience was, and whether they’d go back. Look up lenders online and see what customers have to say about them. In short, get a sense of who you most want to get a loan from.
It’s true that you’ll need to choose your financing within the time limit. But with your budget, down payment, and costs already laid out, you’ll be able to quickly evaluate quotes and set aside those that don’t fit your needs. Once you do have those quotes in place, you’ll be able to do the math on the loan terms, the interest rates, and the car you want to find the car loan that works for you.
In short, the best point to take your time is before you apply for financing. Do your homework, find out what you need out of a car, and you’ll get the best loan, every time.