Buying a new car is exciting. Whether you’re purchasing a used vehicle or a brand new car fresh off the assembly line, the feeling of getting behind the wheel of your new car remains the same. Before you can purchase your new car you need to figure out how you’re going to pay for it and the easiest way is to take out a car loan to help cover the costs. It’s important to always borrow responsibly when purchasing. By keeping these key principles in mind you can make sure that you get the best possible loan for your new car.
#1 Watch Your Credit Score
Anytime you are applying for a new line of credit then you should expect to have your credit score checked. While you can rarely make massive changes to your score in a short period of time, by practicing good borrowing habits like paying down your debts and always making your monthly payments on time you can slowly improve your overall credit health in order to get better opportunities in the future. The better your credit score is the more ideal rates you can look for when financing your car.
#2 Shop Around
While the easiest way to get financed for your new car is to simply work with the financiers at the dealership at which you’re making the purchase this does not mean that it is the best way to get financed. When you shop around and check with multiple lending agents you can find the best rates for you. Don’t forget to look online as well to make sure you don’t miss any opportunities.
#3 Save For a Big Down Payment
Many car sale promotions highlight small down payments or even zero down payment options. While this can be appealing if you need a car in a hurry and lack large savings, it is more expensive in the long run. If possible you are much better off saving up to increase the size of your down payment in order to improve your loan. The less you finance the less you pay interest on and the better rates you can get for that interest.
#4 Negotiate Your Price
Conflict can be overwhelming if you don’t have experience with it but you should always make the effort to negotiate the cost of your car, even when you are paying with a loan and don’t need to provide all the cash up front. Because you will be paying interest on your loan it’s particularly important to shave as much off the price as possible because every dollar saved gets compounded by the interest on it you won’t be paying as well.
#5 Buy Responsibly
It’s important that you stay within your means when making a car purchase. It can be tempting to keep adding on little extras here and there, or to stretch for a pricier model, secure in knowing that the monthly change to your premiums seems low. As the months go by, however, those little bits add up quickly and a poor decision can lead you to fall behind and possibly lose your car.
#6 Don’t Finance Your Fees
There are often several fees and taxes which go along with purchasing a new car. While many salesmen will offer you the chance to add those fees into your financing if needed, this is not a great financial decision. The best way to get an auto loan is to pay for these extra costs in cash. When you finance your fees they become much more expensive due to the interest charged against them over the course of your loan.
It’s easy to fall into the trap of jumping at the first opportunity to buy a new car, but patience is a virtue. Taking the time to get the right loan at the right time is worth the effort and helps ensure your car remains a boon and not a burden.