How to Get a Car Loan in North Carolina

When it comes time to buy a new car, here are a couple tips on how to get a car loan in North Carolina. There are many things to consider when it is time to finance a car, especially in hard economic times. There are many different ways to finance a vehicle, with some being better than others. Here are a few of the options to consider.

Bank or Credit Union

Financing a vehicle at one of these institutions is considered by many as the safest and most affordable. The interest rates at a traditional bank can be much less than found at other finance places. Some banks will go as far as matching an interest rate from another bank or dealership. Another thing to consider is the convenience. When a car is financed at the bank you normally do business with, the monthly payment can be made when you make other transactions. Banks are also considered safe. When using one of the larger establishments (for example Bank of America, or Wachovia; both of which are headquartered in Charlotte), the risk of the loan being sold or the bank becoming insolvent are low. The downside of bank financing is that it can be hard to acquire a loan with a bad credit score.  

Dealer Financing

When bank financing is not an option, dealer financing is a good alternative. One of the upsides to dealer financing is the special interest rates, as low as 0%, that are occasionally offered for qualified borrowers. If you don't qualify for the low rates, or are having trouble getting financing at the bank, most dealers will give you a loan with a higher interest rate. Sometimes it is better to use the larger franchised dealers, such as Bob Murray Chevrolet in Raleigh or Town and Country Ford in Charlotte. The larger size of these dealers allows them to take a higher risk when financing an automobile. When financing a car through a dealer, the buyer needs to be careful not to get pulled into a loan with an extremely high interest rate. It helps to do some research on websites like CarsDirect to see what the interest rates are in your area are. CarsDirect also offers financing services through their website.

Buy Here, Pay Here

For those who have bad credit, and there appears to be no other option, some of the smaller used car dealers offer what's called "on the lot financing". This type of financing is usually reserved for older model used cars and comes with an extremely high interest rate. This needs to be used as a last resort only because of the high interest rate and qualifiers outlined in the fine print of the contract. When using loans like this, payments are usually made on a weekly basis, normally at the purchasing dealer. If one payment is late or missed, the car is immediately repossessed. If this type of loan is pursued be sure to read the fine print and check on the dealer. Most of them do not require a credit check and do not report to the credit bureau; therefore it will not help to improve a bad credit score. These loans are not encouraged and need to be avoided unless absolutely necessary.

Almost anyone these days can qualify for a car loan if done the right way. Be sure to research interest rates, and shop the local banks and dealers for the best one. Most places will compete with each other and this can be used to acquire a lower rate. Another way to keep the interest rate low is to make the monthly payments on time or early. Don't forget to read the contract all the way through before signing it, including the fine print. And lastly, use "on the lot" financing places only as a last resort.