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Credit Tips
Getting the Best Rates on Your Car Loan

If you're about to apply for an auto loan, there's something you should know: Rates offered to you by different lenders may vary not just a little, but a lot. Your understanding of your own credit history, and of how credit-related information is interpreted by lenders, can play a big part in helping you get the best deal possible.

With that in mind, here are a few tips that'll help you nab the most favorable auto loan available:

• Obtain a copy of your credit report. It's important to know what's on your credit report long before you apply for a car loan. Make sure that the information it contains is accurate. If errors are found, contact the credit bureaus and have them corrected.
  
  
• Get your credit score. Credit scores are available online from each of the three credit bureaus: Trans Union, Experian and Equifax. The credit bureaus charge a small fee for allowing you to access your score, but it's well worth it; knowing your score provides you with information that could save you a lot of money in interest charges.
  
  
• Target prime lenders first. It's best to try to obtain credit from a prime lender, since the rates offered by these grantors will tend to be dramatically lower than those offered in the subprime category. Different lenders have different ways of evaluating your score; never assume that you're subprime just because your score isn't perfect. If you're a member of a credit union, it may suit you to get your loan from them, since their rates tend to be lower.
  
  
• Investigate the tiers. Speak with loan officers at the banks you're considering regarding their credit tiers (usually rated as A, A-, etc.) and how they correspond with credit scores and interest rates. Get copies of the appropriate matrices on paper; they'll prove invaluable in helping you get the best deals.
  
  
• Finally, remember that a cheaper loan is always just around the corner. If your credit is such that you're forced to pay higher rates on your auto loan, take heart; timely payments on your loan, and careful attention paid to the overall state of your credit, can help vault you to prime status in as few as two or three years. At that point, you'll be in a position to refinance at a cheaper rate.