Tips to Ensure You Get the Best Car LoanMay 1st, 2019
You want to acquire a new vehicle. You might lack the funds to get this done, or at least the funds to get the vehicle you want, but you need to do this. With that in mind, here are some tips to help you secure a car deal, on your terms.
Some customers spend days ensuring they secure the cheapest pricing on a car of their choice but disregard the need to shop for the best car loan they can get.
That’s an error.
Visiting a car dealer when you don’t have the money in your pocket places you in a vulnerable position to any terms offered by the car dealer. This might mean you see a much higher interest rate than normal for a car shopper, resulting in car shoppers spending a couple hundred dollars in payment for the car loan.
Eventually, seeking an auto loan will force you to assess the total cost of the vehicle and compare with the monthly payment you can afford. But paying more attention to the amount you will pay monthly will increase your possibility of landing a bad car deal.
Be Shrewd: Make stern decisions on the amount you are willing to spend before fixing your sights on any dream car.
For an auto deal to go smoothly, you will need to pick a good vehicle, bargain a good price, and pay the agreed amount in a suitable, comfortable way you can. If collecting a loan for the car purchase is necessary, then the loan and its term are exceptionally vital.
The purpose of an auto loan is to help you get your dream car, even if you are low on cash at that moment of purchase. If you have enough funds in your savings to pay for the vehicle all at once, then don’t consider using an auto loan.
After borrowing to pay for the car, you start paying in parts every month. If you landed a good loan deal, you tend to enjoy these two benefits:
- You will spend less on the car you are purchasing.
- Within a few years, you can still change cars and fund other purchases within that period too.
Make a Budget Plan Before Looking for Cars to Buy
Planning out the auto loan before diving into any car purchase might help boost your chances of hitting the right loan and a suitable car that fits your financial budget.
Car dealers are good at making the deal sound sweet and fun to embark on at the same moment. They can make a car look affordable with fancy mathematical long-term loans, while it is realistically beyond your budget.
Before making decisions on the limits your payment should be, you need to understand what these mean:
This is an upfront payment made when buying a car. The larger your down payment, the smaller the loan and the subsequent monthly payments. It is not that easy writing a huge cheque upfront, but you tend to enjoy flexible payments when you do so.
You make this steady payment for a specified period. Keeping this amount at a comfortable level helps you avoid the inability to meet up with payments if your income drops. Things may not remain the way they are till you pay off your loan – Your income may decrease or increase, unplanned expenses may rise and some other things you don’t have control on. If you spend too much on paying loans today, your future is somewhat at risk.
Car dealerships are not the only place auto loan can be obtained. Credit Unions and Online Lenders are other options to consider when seeking an auto loan. You can even look up some peer-to-peer lending platforms or stick to dealerships with in-house financing programs, such as DriveNation. Regardless of your choice, it’s best to compare loan offers and terms before picking one for your auto loan. That is why we recommend selecting your source of the loan before going to buy a car, it’s the only way to be armed with adequate knowledge of all the loan options available to you. And this gives you good bargaining power.
Ensure your auto loan lets you pay off your loan completely or make extra payments without issuing you any penalty for doing so. After all, life is so unpredictable. The need to clear your debt quickly may arise and you have to do that without facing any penalty whatsoever. Make sure the fine print of your loan terms is read before signing.
In summary, be realistic with your financial budget whenever you set foot in an automotive dealership. This will help you slide past the seduction of shiny new wheels, which seemingly look like good deals, but in reality, you can’t afford. With the right preparation and knowledge, you can buy a car that matches your lifestyle and more importantly – budget.