In today’s market, it is difficult to get a car loan without a high credit score.  People with credit scores below 700 are generally going to be subjected to a high APR on their vehicle loan.  The best type of car loan can be found by doing your research before you purchase your vehicle.  It is best to know the type of vehicle you want, the sticker price of the car, and the amount of money you are going to finance.  Planning ahead will help you to avoid the many common mistakes people make when they go to finance a car.

The biggest mistake people make is not knowing whether their credit score will qualify them will for a car loan.  Your credit score will greatly impact whether or not a finance company will be willing to loan you money for the purchase of a car.  This is especially true during a time when banks and financial institutions are strapped for cash.

Another mistake people make is not researching online interest rates for car loans.  Websites such as Up2Drive.com and MyAutoLoan.com are two examples of internet based companies specializing in car loans.  You do not need to know the exact purchase price of your vehicle in order to use these sites.  These sites will pre approve you for a specific amount to put toward your purchase and put you in a better bargaining position with the dealer.

Try to avoid car dealers who want to base your financing on the “FICO Auto industry Option score.”  Most car dealers will run your FICO Beacon credit report and score from the 2 major bureaus:  Equifax, Experian, and Trans Union.  Some care dealerships use finance managers that utilize specialized software available only to dealers from Equifax.  This generates what is knows as a “FICO Auto Industry Option score.”  This type of credit report is based exclusively on your auto buying history, your car payment history, or any repossession you have had.  If you are a first time buyer, your FICO Auto Industry Option score will be low even if you have an excellent FICO Beacon score.  This can make buying a car very frustrating and even cause a first time car buyer to be rejected for a car loan.

Applying for an online auto loan will help you avoid hassles and potential scams with the dealer when it comes to financing your car. Remember, a car dealership not only makes money on the sale of the vehicle, but will also profit from the interest they earn on the loan they want to give you.   shopping ahead of time for a car loan will give you options on the APR of your loan as well as help you avoid pressure from the dealer to finance with them.  Consumers will want to research the best possible rates for financing a car.  Most likely, this option will not come from the dealership where you purchase your car.  There are many other options such as online auto financing companies and credit unions that may be able to give you better rate.