1: Prepare Early and Know Your Credit Score

You should start with your credit report to see what it would look like for a lender. Perform it at least three months before you intend to buy so that you can act on any outstanding items, recommends Rod Griffin, director of public education for the credit reporting company Experian.

Annual Credit Report.com gives you one free report per year from each of the major credit bureaus:Experiential,Equifax andTransUnion. Take it to your advantage. Do your best to pay off any outstanding credit cards or loans. Or at least make a payment to show positive activity on the account.

Many credit card companies offer credit monitoring services to their customers. Credit Karma, Mint, and Experian’s mobile apps will also display your credit score if you’ve signed up for their service.

Once you get the free credit report, pay close attention to the section that points out potentially negative items, also known as risk factors. Risk factors can range from an old debt that has been collected to a fine you had to pay in a civil court case.

Rather than seeing them as defaults on your credit, “these risk factors can help you, as a consumer, help you rebuild your credit,” says Griffin. Risk factors are present in all reports, so if you resolve an issue that you found on one credit report, the action will be reflected on all other reports.

Use the table below to determine your credit level, based on your credit score. Your credit score will significantly affect the interest rates offered to you at the dealership or credit union:

Here are the approximate interest rates you can expect in the non-prime to deep sub-prime markets. In general, you will see higher interest rates on used cars. New cars tend to have lower prices, but new cars obviously cost more.

New car loan:
Non-prime: 7.1%
Subprime: 11.4%
Deep subprime: 14.1%

Used car loan:
Non-premium: 10.4%
Subprime: 16.9%
Deep subprime: 19.8%

With a good idea of ​​the rates you will be offered, you can now start shopping.