Find the Best Car Loans in Waco, TX

How to get an auto loan in Waco

Purchasing a car is expensive. In the U.S., around 85 percent of new vehicles and 53 percent of used cars are bought with auto loans. In 2017, 107 million U.S. residents had car loans.

Many different companies in Waco offer auto loans — you can choose to finance one through a bank, credit union, dealership or online lender. Many of these lenders offer preapproval for loans, which allows you to search and qualify for loan offers before shopping for a car. Getting pre-approved for a loan has multiple advantages:

• Allows you to compare loans: By setting aside time to apply for financing before shopping for a car, you have an opportunity to compare different loans and rates to get the best deal.
• Sets a budget: Qualifying for financing lets you know your spending limit and helps narrow your search for a new car. Most lenders have car loan calculators so you can compare monthly payments for a variety of loans.
• Gives you leverage at the dealership: Getting pre-approved for an amount lets you act as a cash buyer and negotiate for the total price of the car instead of haggling over monthly payments.

You should get a pre-approval from several lenders to find the best offer. Most lenders in Waco do soft credit pulls when pre-approving loans, so your credit shouldn’t be affected. If you’re working with lenders that do hard credit pulls, keep your shopping to less than two weeks. If done within 14 days, multiple credit checks only count as one hard pull.

Qualifying for a car loan in Waco

Every lender in Waco has different requirements for auto loans, but most require the same information. This includes employment information, income and credit score. Lenders use this information to decide if you qualify, your annual percentage rate (APR) and maximum loan amount.

Your ability to qualify for a car loan and the rates you receive are primarily based on your credit score, though lenders also consider your income. The average new car buyer has a credit score of 714, and the average score for someone purchasing a used vehicle is 655. Higher credit scores lead to lower interest rates on your car loan.

Comparing car loans in Waco

The best way to compare car loans in Waco is to look at the total cost instead of the monthly payments. Shorter loan terms and more substantial down payments help reduce the amount you pay over the life of the loan.

The following chart shows some common things to look for when comparing loan offers.

What to know when comparing auto loan offers in Waco

Be sure your total loan amount also covers any upfront costs you may be expected to pay.

Getting a car loan with bad credit in Waco

Purchasing a car with bad credit in Waco is frustrating but not impossible. Many online lenders specialize in working with car buyers with bad credit or no credit history, but you can expect to pay higher interest rates or make a more substantial down payment. If you can wait on buying a car, saving for a down payment or improving your credit score helps you qualify for a better APR.

You can also ask a relative or friend with strong credit to co-sign your loan. This is a legally binding agreement stating your co-signer promises to pay the loan if you default, which reduces the lender’s risk and allows you to use your co-signer’s credit history to qualify for a loan with a better APR.