Most Americans dream of purchasing a car of their choice. While it is possible to buy a car using a loan provided your credit score is great, you need to ensure that you select the right car, negotiate a great price or ensure that you fund the purchase with affordable resources.
Buying a car can be an involving, though exciting, experience. However, it can also turn to be a painful exercise if you fail to do the necessary homework. If you choose to buy the car with a loan, be sure that you will pay the monthly repayments without fail.
Ensure you have Excellent Credit History
Before you decide to purchase a car on loan, make sure that you analyze your credit history. As a U.S. customer, you must be issued with a free credit report as laid out in federal laws. Ensure that your credit score is great, since it can influence the interest rates that you will be charged, and hence your monthly repayments. If your credit score is computed inaccurately, fix it as soon as possible.
Visit Several Lenders to Compare Rates
Once you have an idea of how much money you want to spend to purchase your car, visit various lenders to compare which one offers you the best package. You can get a car loan from a credit union, car dealerships, banks and other financial services providers. Once you select the best package, you will be required to give your lender details such as your date of birth, name and address, current employment details and social security number. Your salary information will also be required by way of paycheck stubs.
You need to also be aware that banks and financing institutions will charge you higher interest rates if you opt to buy a used car than a new one. While dealerships can offer you financing, you may find yourself subjected to hidden commission charges. It is also good to visit a dealership with a preapproved loan as this gives you flexibility and bargaining power.
Keep the Loan Tenure Short
Ensure that you select a short-term loan, since the interest rates a lower, though you will pay higher monthly instalments. It might be enticing to obtain a longer term loan of six or ten years, but you will end up paying a lot of money in interest and also your car’s value will have depreciated a lot over the period, leaving you financially worse.
If Possible, Put in a Down Payment
If you can afford it, put in a down payment, preferably 20 percent of the total cost of the car. This saves you the horror of paying more for your car than it is really worth a few years down the line. It also helps you select a short-term loan package.
Select the Right Vehicle
Buying a car for personal use isn’t an investment. Hence you need to choose the right car that doesn’t dent your pockets. You need to check whether such a vehicle has good maintenance reviews, its size matches your needs, and that you can afford the insurance rates. Ideally, the car should also have excellent fuel economy.