The process of financing a new car can seem daunting, especially if you’re a first-time buyer. However, there are some steps you can take to alleviate some of the stress. Let’s talk about what you should do when seeking financing for your new vehicle.
Know Your Limits
Financing a car is just like any other loan. You apply for the financing, get approved, and then start making monthly payments until the loan is paid off. Before you even step foot into a car dealership, you have to know what you can afford. When considering how much a new car will cost you, it’s important to factor in not just the sticker price, but also fees like the license plate, tax and title, gas, and future maintenance. Once these costs are factored in, you can determine how much of your budget you can dedicate to monthly car payments.
If you’re able to save up a sizable down payment, that can help reduce your monthly payments. Some lenders also take the size of down payment into consideration when determining the rate of interest you should pay on your loan. You should also check your credit score. A low score can mean higher interest rates. If your score is too low, you may not even be able to qualify for financing.
Shop Around
Once you’ve determined your budget, you should take a look at different lenders and what they have to offer. It helps to compare interest rates and the terms of the loan. You don’t want to get stuck with a high-interest loan that takes forever to pay off. Once you find the loan that’s right for you, you can apply online for pre-approval.
If you’re unable to qualify for traditional financing, you may want to consider a home equity loan or even a loan from a family member. While you’re researching loans, you may also want to research car prices. You should know which cars are in your price range.
Negotiate
Once you’ve received the pre-approval letter for your ideal loan, you should head to the dealership with that letter. If the dealer knows you’ve already sought financing from another source, they’ll often try to give you a better financing package. The dealership may also be running a special financing promotion like 0 percent intro APR or low-interest financing. It doesn’t hurt to try to get a lower price on the car you want to purchase either. Check with the dealer for special rebates or discounts, especially if you’re a student or veteran.
Explore Your Options
Once you’ve decided to make a purchase, you should decide which financing option is the best for you. Make sure you understand all of the numbers. It’s important to have a clear understanding of the interest rate, terms of the loan, and what your monthly payment will actually be.
By arming yourself with this knowledge, you’ll have to confidence to purchase the car that’s right for you so that you can have fun and enjoy the ride! Come see us today at Russell & Smith Honda.
Image from Pixabay Pixabay License
Connect with us
