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7 Things You Should Know About Auto Loans Before You Apply, According To An Industry Leader

Plus, easyfinancial's giving you the chance to win $20,000 towards your dream car.

7 Things You Should Know About Car Loans Before You Apply, According To A Canadian Expert

Buying a car can be an exciting but daunting process. After saving your hard-earned dollars and choosing your new ride, it can be disappointing to find out you don't qualify for the auto loan you need.

According to Andrea Fiederer, Executive Vice-President and Chief Marketing Officer for goeasy ltd. (the parent company of easyfinancial), roughly one in three Canadians don't qualify for prime lending rates. This creates additional challenges when it comes to buying a car.

To make your car-buying process a smooth one, easyfinancial launched a new Auto Loan product, offering pre-approved financing for Canadians who are looking to purchase a vehicle between $5,000 to $30,000.

Online applications can be completed in minutes, and easyfinancial's team of knowledgeable experts are ready to help you with everything — from pre-approval and shopping to negotiating and purchasing.

Ultimately, easyfinancial's new Auto Loan gives Canadians the flexibility and the freedom to buy a vehicle from any dealer (online or privately). To celebrate its launch, easyfinancial is giving Canadians a chance to win $20,000 towards the car of their dreams from now until October 31.

If you're getting geared up to buy a car, here are Fiederer's seven tips that every Canadian should know about car loans before applying.

Small Payments Make A Big Impact

Pickawood | Unsplash

According to Fiederer, "one of the most important factors in determining your credit rating is demonstrating that you will pay back any amounts you owe."

Fortunately, auto loans often involve lots of smaller payments, which is why they're such an effective way to improve your credit score. "An auto loan can be the perfect vehicle to establish a great track record," Fiederer told Narcity.

When it comes to auto loan terms, easyfinancial's range from 12-84 months. If you're on a budget, you can choose to spread the payments over a longer period of time. This will cost you more in total, but your monthly payments will be smaller so you can stay on budget.

Ensure You're Insured

Orkun Azap | Unsplash

As auto lenders require you to have standard vehicle insurance coverage, be sure to work the cost of insurance into your budget. Although not all auto loans allow you to pay off your balance at any time, if you're able to pay off your loan early, you can easily reduce the total amount of interest paid.

Just be sure to ask the lender if you'll be penalized for paying off your loan early so that you're aware of what you're signing up for.

Term Matters

Erik Mclean | Unsplash

"There are two factors that will determine your total monthly or bi-weekly payment amount: the interest rate and the duration," Fiederer said.

Knowing your numbers and where you stand with your monthly budget and income can help you make an informed decision — you can make smaller monthly payments over a longer term with greater interest, or larger monthly payments in a shorter term.

Keep Your Credit In Check

Towfiqu barbhuiya | Unsplash

Did you know that a credit check can temporarily lower your credit score? For those who are concerned about their credit, this is definitely something to keep in mind.

Fiederer shared that many dealerships will perform a hard credit check if you plan on financing with them. Applying for easyfinancial's Auto Loan, however, won't affect your credit score. Instead, easyfinancial puts you in the driver's seat so that you can take control of your car-buying experience and make it simple with pre-approved financing.

A Co-Signer Can Help

Romain Dancre | Unsplash

When it comes to financing a vehicle, two may be better than one. If you've been turned down for financing or don't qualify for whatever reason, adding a co-applicant could help you get a loan, lower your rate or both.

Just make sure that your co-signer is a trusted ally. Whether a friend or family member, their own credit is essentially being used to help your credit.

Ask The Tough Questions

Gustavo Fring | Pexels

Take your time and ask lots of questions if there's anything that's unclear about your financing. Make sure the salesperson explains all of the key clauses to your satisfaction so that you know what you're signing up for.

Fiederer also noted that it's important to have a negotiation game plan — something many Canadians often overlook — so you can stick to car-buying best practices.

Here are some tips: know your prices using the Kelley Blue Book or Canadian Black Book, understand market conditions, scan the lot at a dealership and remember to take a break if things start to get out of hand. You can always walk away.

Set Yourself Up For Success

Lady Escabia | Pexels

Before you consider heading to the dealership, Fiederer advised knowing how much you're approved for and at which rates to avoid any potential disappointment. Nothing's worse than being told "no" when you've already eyed the car of your dreams!

If you aren't sure that you'll be approved for dealership financing, seeking out pre-approved financing from easyfinancial could be your best option. "Easyfinancial's new pre-approved auto-loan program allows customers to purchase their vehicle from any dealer, online or privately," Fiederer said. "They can feel confident purchasing the car they want, without having to go through the many complicated steps of the traditional auto financing transaction."

"easyfinancial's new pre-approved Auto Loan allows customers to purchase their vehicle from any dealer, online or privately," Fiederer said. "They can feel confident purchasing the car they want, without having to go through the many complicated steps of the traditional auto financing transaction."

Fiederer advised that prospective car buyers always have a plan and budget in place. Planning will help you feel prepared, which is why you'll want to identify what you'll be using the vehicle for, who will be driving it and the cargo space required.

You'll also want to confirm common maintenance and repair items (and where to get those done). Along those same lines, it helps to know how the car rates for reliability, if it holds its value well and if it has a transferable warranty.

These points on the checklist often go overlooked, as do pre-purchase inspections (PPI). According to Fiederer, "Having a pre-purchase inspection performed before you buy a used car is an added expense, so buyers can be tempted to skip having one done. However, it is the single best thing you can do to add confidence to your purchase decision." Plus, it also comes in handy for negotiations.

Whether you're buying a vehicle for the first time or you're looking to add another, an easyfinancial Auto Loan for $5,000 to $30,000 might be just what you need.

To learn more about easyfinancial's new Auto Loan, visit their website or check them on Facebook, Instagram, Twitter and YouTube. For a chance to win $20,000 towards the car of your dreams, visit the official contest website.

This content is for general informational purposes only and does not constitute financial, investment, legal, tax or accounting advice.

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