Find the Best Car Loans in Tucson, AZ

How to get an auto loan in Tucson

You have many options if you’re looking for an auto loan in Tucson. Car manufacturers, dealerships, banks, credit unions and online lenders all offer financing for purchasing vehicles. Although various lenders offer different terms and interest rates, most have the same basic qualifications to apply:

• Proof of income: Having a steady source of income is essential and assures lenders that you can afford to pay back what you borrow. Pay stubs or bank statements are generally sufficient; however, some lenders call your employer for verification.
• Proof of residence: Many lenders like to see proof of where you live. Besides showing stability, it also gives them an address where they can contact you if you miss a payment or default on your loan. A utility bill in your name generally confirms your address.
• Proof of identity: If you’re working with a lender for the first time, you’ll need to provide proof of your identity to protect against fraud. Most state or government-issued photo IDs should be adequate.

Getting pre-approved for a car loan in Tucson

There are many benefits to shopping for a loan before stepping into a dealership. Being pre-approved for an auto loan means a lending institution has agreed to loan you money for a car before purchasing one.

Benefits to getting pre-approved for a loan:

• Allows you to compare rates and terms: Setting aside time to apply for loans before shopping lets you see offers from multiple lenders and accept the one with the best rate. You may even be able to use offers to negotiate with companies and let them compete for your business.
• Sets a budget for shopping: By getting pre-approved for a loan, you know the amount you can afford before shopping for a car. Knowing your budget lets you narrow your search.
• Lets you negotiate for the car by total price: Many dealerships in Tucson negotiate with monthly payments amounts, which means you may end up paying more for the vehicle by taking out a longer loan with lower monthly payments. Negotiating for the total cost of the car often results in a better deal.
• Reduces the stress of the car-buying experience: Negotiating with the dealer on a price of a car can be stressful, and arranging financing at the same time can make the experience overwhelming. Getting an auto loan before buying a car lets you separate the two decisions instead of doing them at the same time.

Qualifying for auto loans in Tucson

Your credit score is a vital factor when qualifying for a car loan. A good score is relative and depends on the scoring system used by the lending institution. The average credit score for borrowers purchasing a new car is 714, and the average for used car buyers is 655. The better your credit score, the lower your car loan rate is. The annual percentage rate (APR) for loans in Tucson ranges from 2.6 to 18.98 percent.

Comparing car loans in Tucson

When comparing loan offers, the most important thing to look at is the total cost of the loan. A low-interest loan that is paid off over an extended term could be much more expensive than a short-term loan at a slightly higher interest rate. Things that affect the total cost of the loan are:

• APR: The loan’s APR is the interest of the loan plus any additional fees charged by the lending institution. Even a few points difference in the APR of a loan can add thousands of dollars over the term of the loan.
• Loan terms: Car loans are typically paid off over a term of two to eight years. The average new auto loan is around 65 months, while the average used car loan is much shorter. Longer terms result in lower monthly payments but a higher total loan cost.
• Down payment: Although borrowers in Tucson with bad credit may need to make a more substantial down payment, most car buyers can choose the amount they pay upfront. Making a more substantial down payment reduces the total cost of the car loan and may qualify you for lower interest rates.
• Additional fees and costs: Don’t be surprised by additional expenses like documentation and origination fees. Some lenders may also charge a fee for paying off the loan before the end of the predetermined term. While not part of the loan, be sure to budget in costs that add to the total price of your car purchase, including insurance premiums and registration fees.

Getting a car loan with bad credit in Tucson

While it’s more difficult to qualify for a car loan with bad credit, many online lenders specialize in working with borrowers who have difficulty getting loans from traditional lending institutions. If possible, taking the time to save up for a more substantial down payment improves your chance of being approved for a loan. You can also use this time to improve your credit score.

If you’re unable to wait for your purchase, ask a relative or friend with strong credit to co-sign your loan. This lets you use their credit score to qualify and secure a better interest rate, but your co-signer is liable if you default on the loan.