So you’re thinking about financing your car loan, but you’re not sure where to start. Don’t worry, we’ve got you covered. Here are five things you should do and five things you shouldn’t do when financing your car loan.
Car Financing Do’s
Firstly, let’s look at the “Do’s” of car financing:
Do Your Research And Know Your Budget
Make sure you know exactly what you’re looking for before you start shopping around for a loan. That way, you can be sure to get the best rate possible. Then, use a car loan calculator to determine your budget before you start shopping around.
Don’t just go with the first loan that comes your way. Talk to multiple lenders and compare rates before making a decision.
Read The Fine Print
This is important with any loan, but it’s especially important with car loans because there are often hidden fees that can add up quickly if you’re not careful.
Make A Budget
Before you finance a car, it’s important to sit down and figure out your budget so that you know how much you can afford to spend each month on a car payment. Keep in mind that your monthly payment will likely be higher than just the cost of the car itself—you’ll also need to factor in insurance, gas, and maintenance costs.
Have A Down Payment Saved Up
The more money you have for a down payment, the lower your monthly payments will be. So if you can swing it, put aside some money before applying for a loan so that you can get the best rate possible.
Car Financing Don’ts
So we’ve looked at what you should do, but what shouldn’t you do when financing your car?
Don’t Finance More Than You Can Afford
It’s easy to get caught up in the excitement of buying a new car and end up financing more money than you can realistically afford to pay back each month. But how can you do this?
First, consider your overall budget. How much can you afford to spend each month on transportation? Factor in things like gas, insurance, and maintenance. Once you have a good idea of your monthly budget, you can start looking at cars.
Second, think about what you need in a car. Do you need a lot of space? Do you need special features like 4-wheel drive? The more specific you are about what you need, the easier it will be to find a car that fits your budget.
Third, take a look at your credit score. This will give you an idea of what interest rates you will qualify for. The better your credit score, the lower your interest rate and monthly payment will be.
Finally, don’t be afraid to negotiate. Many dealers are willing to work with buyers to get them the best deal possible. If you’re not sure how to negotiate, ask a friend or family member to come with you. With these tips in mind, you’ll be able to find the perfect car for your budget.
Don’t Rush Into Anything
Take your time when shopping for a loan and make sure you understand all the terms and conditions before signing anything—you don’t want to end up with a loan that has an unnecessarily high interest rate because you didn’t bother to read the fine print!
Don’t Be Afraid To Negotiate
If you don’t like the interest rate or terms being offered by one lender, don’t be afraid to shop around for a better deal—there are plenty of lenders out there competing for your business, so take advantage of that competition!
Don’t Neglect Your Credit Score
Your credit score is one of the most important factors lenders look at when considering a loan, so if yours isn’t in great shape, it’s worth taking some time to improve it before applying for financing.
Don’t Forget About Other Costs
In addition to your monthly car payment, don’t forget that there are other costs associated with owning a car, such as insurance, gas, and maintenance. Make sure these additional costs are factored into your budget before deciding how much you can afford to spend each month on a car payment.
When you’re looking to get a vehicle, whether it a second-hand or new one, it’s all too easy to take the first finance deal that comes your way. Give yourself time to look into whether the rates you’re being offered by the dealership, loan company or your bank are fair, competitive and that you can afford the repayments.
A reputable seller should give you time to look at all your options when it comes to how you’re financing the vehicle.
Applying for financing doesn’t have to be complicated or stressful – just follow these simple do’s and don’ts , and you’ll be on your way to getting the best deal possible!