Find the Best Car Loans in Kansas City

How to get an auto loan in Kansas City

If you’re thinking about purchasing a car with a loan, you’re not alone; in 2017, 107 million Americans had car loans. Financing can come from dealerships, banks, credit unions or online lenders.

To decide the best option for you, you should compare quotes from multiple lenders. You don’t need a car in mind when you shop for quotes; most lenders will use your information to give you a breakdown of what they will lend you at what terms.

Getting pre-approval for auto loans in Kansas City

Many people in Kansas City choose to set up their financing before shopping for a car. Getting pre-approved or pre-qualified for a loan has multiple benefits. With a loan in place, you can go into a dealership knowing exactly how much you can afford. This process will break down what you will expect to pay monthly and for how long; if you go into a dealership without this information, you may be surprised by overall costs.

Pre-qualifying for a loan also gives you leverage when with the dealership by letting you negotiate for the total price of the car instead of monthly payments.

When comparing pre-approval offers, look for:

• Annual percentage rate (APR): This is the total interest rate plus lender fees. Your credit score mostly decides this rate, and APRs for car loans typically range from 3 to 15 percent. The national average is 4.21 percent.
• Loan term: This is the amount of time you have to pay off your car loan, usually between 36 and 72 months. The longer the term, the cheaper your monthly payment — but you will accrue more interest, costing you more in the long run.
• Down payment: You may need a larger down payment if you have poor credit. No matter your credit score, choosing to pay more upfront will cut your monthly payments or allow you to pay your car off over a shorter term.
• Taxes and fees: In addition to the price of the car and the APR, you may have to pay additional charges, including state sales tax, origination fees and documentation fees.
• Prepayment penalties: Find a lender that will allow you to pay your loan off early. Some lenders will charge a penalty fee if you pay off your loan before the term is up.

How are my rates determined?

Your credit score is the primary factor that determines loan rates. The average credit score of borrowers who receive financing for an auto loan for a new car is 714, and the average score for people purchasing a used car is 655. You may still qualify for a loan if you have poor credit, but your terms and APR will be less than ideal.

To get better loan terms, you can have a family member or friend with good credit co-sign your loan. This person signs a legally binding contract agreeing to pay your loan if you default. Any payment default will negatively affect their credit score.

How do I compare my rates?

Once you have a few quotes from different lenders, compare what they’re offering. Comparing the total loan amount (loan plus interest that will be accrued) instead of the monthly payments will give you a more accurate representation of what you can expect to pay.

Does getting pre-approved affect my credit?

Depending on the lender, they may have to do a “hard” credit pull, which can temporarily lower your credit score. This is more likely if you are trying to receive a pre-approval than a pre-qualification. A pre-approval locks in your rates, while a pre-qualification can change based on a full credit check.

You should keep all your lender shopping to a short amount of time to prevent hits to your credit score. Multiple checks within 14 days only count as one “hard” pull.

How do I choose lenders to compare?

Your best bet is to choose the lender that offers the lowest cost on the total loan amount. When narrowing your choices of lenders to compare, check online reviews and reports to ensure that the company is reliable and easy to work with.