Let us begin discussing what mistakes people tend to make while looking around for good auto loans. The biggest mistake that vehicle buyers make is walking into a dealership with the sole focus of finding a vehicle and negotiating a deal, and accepting whatever loan the dealership’s financial office offers. However, what they do not realize is that smart shoppers researching a bit about auto loans, how to get the best possible one, and negotiating about the same can save them a lot of money.

Here are some useful auto financing tips for clinching the best auto loan deals while buying your next car:

1. Working on your credit
Before you start shopping for a vehicle, checking your credit score is the smartest idea. The FICO score is the most-used version by most of the lenders in the country. The reason you need to do this is because your credit score could end up having a huge impact on the APR you could obtain on your car loan. It can take ages to improve credit scores dramatically, so it is completely possible to boost scores by a significant amount quickly. So, for making your scores jump, look to pay off credit card debt, or you could even ask creditors for higher limits. Typically, a FICO score of 710 will result in car buyers paying more than $1,100 in extra interest on a $30,000 car as compared to somebody with a score of 720.

2. Get reasonably affordable loans with short loan terms
In the last 10 years, new cars have become much more expensive to buy, and car loan terms have become longer for keeping monthly payments affordable. Today, the industry standard is a 72-month car loan or even 84 months and longer becoming available. However, buyers are better off choosing short loan terms that they can afford with the monthly payments too. Firstly, the interest is lesser. Secondly, shorter loan terms represent a lesser risk to the lender, resulting in lower APRs as compared to longer-term loans.

3. Shopping around for car loan terms
Perhaps one of the most important and responsible acts that you can do as a buyer is shopping around for car loan terms before approaching any one company for the final one. According to a provision in the FICO formula, rate shopping for loans is encouraged – all and any hard inquiries taking place within a two-week period are considered as a single inquiry, which essentially means that if one applies to a handful of lenders, it will have the same impact on their credit score as applying for one single loan. Try local credit unions and banks first. It is also a good idea for buyers to have pre-approved financing in their hands when they begin the car-shopping process. Since dealerships today will undoubtedly match or even beat documented financing offers, do remember to check the loan rates at a few lenders first before starting the shopping process.