Financing a car is one of the only ways some drivers are able to afford a car that they really want to drive. However, you need to make sure you consider the things laid out here carefully first. There are many mistakes you can make when financing your car. Read on if you’re looking for a new car and you’re planning on using finance:
Auto Financing Advice
It’s important to remember that cars depreciate as soon as you buy them. It’s not an investment – it’s more of a liability! That being said, many of us do need them to get from A-B. But because the car isn’t an investment, it’s wise not to pay interest on a car loan. The car value with drop faster than you can repay the loan and you’ll owe more than the car is actually worth.
Understanding Your Credit Score
You must check your credit score out yourself before you go and get a car loan. You will be able to get a car loan even if your credit score is terrible, you’ll just end up paying a hell of a lot more. Banks are easily able to repossess your car if you can’t pay your loan back. If you have a bad credit score, you may be paying interest of 10% or more. If you can lower your score before you go car shopping, it’ll help you to pay less.
Getting Financing Quotes Before You Go Car Shopping
If you don’t have A star credit, then you can try online lenders. Simply complete a credit application and you’ll be given an interest rate and max amount you can spend on the car. Then, if the dealer gives you a better deal, you don’t have to use this loan. You’ll just have a bit of leverage and an interest rate to beat. You want a dealer that’s going to be honest with you about financing a car, such as West County Volvo. They look at leasing vs. financing to help buyers make better decisions. Make sure you choose your dealership carefully.
Keeping The Term Short
When you take out a shorter loan, you’ll have a lower interest rate but a higher monthly payment. Ideally, this is what you want. Spreading the cost too much will mean lower monthly payments but paying way more back on your car than you need to. Pay attention to how much you’re paying for the car overall, and not just the monthly payment price.
Putting Down Your Deposit
Your deposit should be at least 20% of what the car is worth so you can have lower monthly payments. You might think this is an obvious point, but in many dealerships it isn’t even compulsory for buyers with good credit to put down a down payment.
Financing a car isn’t a decision to take lightly, but if you save up a decent down payment, keep the loan term short as possible, fix your credit, get another loan quote and negotiate, you should be able to enjoy a decent deal!