Navigating the auto loan marketplace

With all the professional and personal complexities of modern life to contend with, it's essential to have your own readily available transportation at hand. But buying a car isn't something that can be taken care of at the drop of a hat - at least not for most people. As a result, it'll likely be best for you to locate and secure a reasonable form of financing.

"Auto financing is an essential reality for many hardworking Americans in need of transportation."

There are, however, a few wrinkles to the process that those new to the auto loan marketplace might not immediately pick up on. Let's take a moment to go over them and also assess how alternative lenders and credit decisioning can make the hunt for an auto loan a little bit easier. 

Don't confuse car-shopping with loan-shopping 
The choice to look for a new auto loan in tandem with your search for new wheels can be problematic. Handling your quest for the loan itself should come first if you want to achieve the best results. 

Why separate the two? According to Bankrate, obtaining a loan in advance from a lender of any kind offers you leverage that you wouldn't have if you walked into a dealership and sought to acquire a new vehicle using a loan directly offered by the auto retailer. If you already have financing going in, you might manage to negotiate an even better deal with the car salesperson. 

Watch APR like a hawk 
Annual percentage rate is, in many ways, the engine that drives the cost of an auto loan. The percentage locks in once you land the financing but changes daily during your shopping process, so you will need to check it regularly before you decide on one, according to Consumer Reports. 

Keep time on your side
Although a longer-term loan may look more manageable due to its lower monthly payments, the way its interest is drawn out ultimately mitigates any advantage the length of the term would otherwise create. Consumer Reports noted that as long as it's feasible to cover the required amount each month, a three-year loan is better in the long run than one with a term of five or more years.

Pursue alternative options
The Balance recommended finding as many loan options as possible, so consider adding alternative lending providers to your search for vehicle financing. These providers will often be more likely to consider assessments from alternative credit scoring models that better account for people's financial realities.

What to do if you can't make your car payments? Find out here.

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