Today, an increasing number of US residents have struggled to pay their monthly auto loan installments. While the numbers are low, they are increasing at a rapid rate. However, loan applicants have had many problems when it comes to monthly payments. This is happening more since the Great Recession.

As a car buyer, you may want to make sure you can repay the loan. The car should be something that you can easily afford and it should also fit into your budget. This will save you problems in most cases. If you want to get the best deal, we suggest you follow the 5 tips below.

1. Check your credit reports

First, you must obtain your credit report from all three agencies: TransUnion, Equifax, and Experian. Actually, you need to check all three as you have no idea which one your desired lender is going to use. Furthermore, this will also give you enough time to correct your mistakes.

Apart from this, you should check your credit rating because your credit rating will be used to set the interest rate. If you have a good credit rating, you can get a loan at a considerably lower interest rate, and vice versa.

2. Compare prices

We suggest you shop around when looking for the best deal. Similarly, you should look for the best deal when it comes to applying for a loan. Most people don’t. Most of them don’t do their homework before going to a dealer.

According to the Center for Responsible Lending, 80% of car buyers make their financing decision at the dealership. It’s probably the convenience or appeal of ads that offer low interest rates. Keep in mind that you can get the lowest interest rate only if you have very good credit scores.

If you want to get started, we suggest that you contact community banks and credit unions. They generally offer the lowest interest rates on auto loans.

3. The shortest loan

Since car prices have risen, auto loans are provided with higher interest rates so that the full amount of the car can be paid in the lower monthly installments. So today you can finance your car for up to 9 years. Monthly payments will decrease with an increase in the number of installments.

Here’s the catch: If you choose a higher interest rate and decide to make payments over, say, 5 years, you will pay more for the car in the long run than if you had chosen a shorter payment period. Therefore, you should choose a shorter period for payments, as this will help you pay off the loan faster.

4. The monthly payment

Some people assume that they are ready to move on as long as they can make the monthly payments, but this is not a good assumption. In fact, this is a terrible mistake.

Therefore, before applying for a car loan, be sure to consider these 4 factors.