On average, Americans buy over 17 million cars each year.
Are you tired of driving around in an unreliable and unappealing vehicle? If so, investing in a new car, truck or van is important. Before going out to look for a new vehicle, you need to decide how you will finance this purchase.
Most people do not have the money to pay for a vehicle purchase outright. The best way to get the funding need for a new vehicle is by taking out a loan.
Read below to find out more about how to get the best possible car financing on the market.
What Does Your Credit Score Look Like?
In order to find out what type of car financing options you have, you should look at your credit report. Usually, the lower your credit score is, the higher the interest rate will be on your car loan.
There are tons of free websites out there like Credit Karma that will offer you a free look at your credit report. If there are any inaccuracies on your credit history, you need to address them before proceeding with the loan application process. Boosting your credit score by even a few points can make a drastic difference in how much you pay for a new vehicle.
Shorter Loan Terms are Preferable
Getting a shorter car loan term with a low interest rate can save you a lot of money in the long run. Lenders like https://www.loanable.com/ offer a variety of different loan terms. If you are unsure about what repayment plan is best for your situation, meeting with lending professionals is a must.
While you will have a higher monthly payment with a short-term loan, you will pay less interest over time. If you are financially able to take on a higher payment, you should definitely do so.
Put More Money Down
Are you trying to reduce the total cost of buying a new vehicle? The best way to accomplish this is by putting money down. If you can scrape together 20 percent of the total purchase price, you can significantly reduce your monthly payment.
Don’t have a large amount of cash to put down on a car purchase? Trading in your existing vehicle can also help you reduce the cost of a car purchase. Before trading in your vehicle, be sure to do some online research to assess its value.
Avoid Financing Miscellaneous Expenses
While it is easy to roll things like the price of taxes and fees in with a car loan, you should probably avoid doing this. The more “extras’ you put into a loan, the more you will have to inevitably pay back. If at all possible, you need pay for these parts of car purchase with cash. Adding in these expenses may also lead you being upside down on your car loan for a while.
Before signing off on a car loan, be sure to inquire about things like whether or not gap insurance is needed. Even if you have to pay more for this type of insurance, it will usually be worth it. The right lender can make the car financing process simple and stress-free.