Smart Auto Financing Tips to Help You Save
People often forget to include the cost of auto financing when they head out to buy a car. Because of this, they end up leaving financing until they’re already at the dealership, and then end up paying a lot more than they should. Don’t make that mistake. Check out these tips that will help you save.
Understand your credit score: Always check your credit score and credit report before you apply for a car loan. This gives you a chance to correct any errors, and if possible, improve your score. It’s important to do this because you can get a car loan even if you have poor credit. But you’ll just pay a lot more for it. If you default, lenders can easily repossess your car.
Get quotes: Even if you have excellent credit, always shop around and get multiple quotes for your car loan. If you do have amazing credit, then you can ask the dealer for quotes as well. If not, then check online lenders. Fill out a credit application, and they’ll share an interest rate and the maximum amount you can borrow. Also, check with local banks and credit unions for competitive quotes for new or used car loans.
Keep the term short: When you keep the loan term short, you have to pay higher monthly payments. But your interest rates will be lower. You will also end up paying less for the car than you would with a longer-term. If you choose a longer-term loan, the interest rate the lender charges is higher. Despite paying less every month, you will pay much more for the car that is going to be depreciating. So stick to a loan term that’s between 36 and 60 months.
Taxes, fees, and extras: Pay for these with cash. Do not roll them into your loan because you shouldn’t be paying interest on any of these.
Down payment: Put 20% of the car’s price as the down payment. Save up until you can manage this. Put down more if it’s possible. The larger your down payment, the smaller your loan amount will be. Do not let the salesman convince you to decrease your down payment amount.
