Need a Car Loan? Here's Suze Orman's Advice

It's worth keeping in mind, given that borrowing rates are up.

For some people, owning a vehicle isn't a want -- it's an absolute need. If you live somewhere without adequate public transportation or have a job that's not accessible without a personal vehicle, then you'll need a car to earn a living and just plain function.

The problem, though, is that borrowing rates are up right now across the board on the heels of Federal Reserve interest rate hikes. That means you're apt to pay more to borrow money whether you're looking at a personal loan, a home equity loan, or an auto loan. And given that car prices are quite expensive these days, especially for new vehicles, you'll need to be really careful when taking out an auto loan.

In fact, financial guru Suze Orman says the current average interest rate for a 48-month used car loan is nearly 7%. And in light of that, it's important to stick to these tips if you're looking to finance a vehicle purchase.

1. Apply when your credit is strong

Anytime you need to borrow money, your credit score is apt to have a huge impact on the interest rate you're eligible for. Orman pulled data from Experian that said auto loan borrowers with a credit score of at least 780 recently snagged an average interest rate of under 4% for used car purchases. But borrowers with a credit score between 600 and 660 paid almost 10% interest on their auto loans.

If your credit score could use work and you don't need to buy a car immediately, Orman suggests waiting until your score hits the 700 mark or higher to move forward with an auto loan application. Waiting to boost your credit score could mean snagging a far more competitive interest rate on your loan, and spending a lot less money to pay off your car.

2. Think short-term

Any time you drag loan payments out over a lengthy period of time, you pay more interest than you do for a shorter-term loan. Seeing as how borrowing rates are generally up these days, Orman suggests taking out an auto loan with a fairly short repayment period -- ideally, 36 months or fewer. And she insists that you should not be paying off an auto loan for longer than 48 months.

Of course, sticking to this sort of time frame might mean having to purchase a less expensive car. That's not necessarily a bad thing, though, especially if money is tight.

There's obviously something to be said for owning a car that's loaded with great features. But remember, the vehicle you buy today isn't necessarily the one you'll be stuck with for the next 15 years. And you can always try to sell your car and upgrade to a nicer one if your financial situation improves.

Buying a car is an expensive prospect these days. If you need to finance a vehicle, it pays to follow Orman's advice, even if that means having to wait on a car purchase or adjust your expectations a bit.