3 Intelligent Tips to Get Financed for a Car
Buying a car can be one of the bigger investments you ever make, and most buyers to seek some type of financing to make the purchase. According to Experian, 85 percent of new car purchases involve a loan. When it comes down to it, there are two things you have to do during this process: You need a vehicle that suits you and a vehicle that suits your budget. It’s easy to get caught up in the former and disregard the latter when you seek financing. While car financing options are fairly easy to find, it’s easy to make some major mistakes. If you are wondering how to get financed for a new car, here are three intelligent tips to help you out.
1. Educate Yourself About Auto Loan Lending
Walking into a place to get financing is not something that should be taken lightly; it is best to arm yourself with knowledge before you go. You should have a basic understanding of things like car loan interest and car loan terms. In general, getting a car loan means you will be accepting money from a lender to pay for your vehicle. The money borrowed will be required to be paid back in even increments, or payments, over the course of a loan term, which can last a certain number of years. The interest you pay on the loan will depend on a few factors, such as how much you pay down and what your credit score is. The more versed you are in the sometimes confusing world of lending, the less likely it will be that you make a mistake because of a misunderstanding.
2. Get Familiar with Your Credit Score
Your credit score is like a badge of identification you wear in the eyes of a lender. This score tells the lender how much of a risk it would be to give you the money you need. Therefore, you should absolutely know your credit score before seeking a loan so you know what it is you bring to the table. Get your free credit report on a site like Credit Karma, look it over, and get familiar with your score, your weaknesses, and your obvious selling points. For example, if you have a lower credit score because of opened accounts, but exceptional payment history, this is something you can discuss with the lender to get the best loan terms. Keep in mind that lenders will often offer things like no down payment or lower interest rates for buyers who have the highest credit scores.
3. Keep the Loan Term As Short as Possible
Lenders may offer you a loan term of as long as several years, which can be attractive if you’re looking for a smaller monthly payment. However, longer loan terms can have you paying more for your vehicle when pay off is complete. To keep the loan term as short as possible:
- Pick the highest monthly payment you can afford
- Make a down payment to reduce the overall price of the vehicle
- Pay out of pocket for transferring and licensing fees instead of including those fees in the loan
When you take your time, examine your options, and pursue the best car financing options, you can get in the car you want with a payment that makes good financial sense. Reach out to Cars 911 to talk about our amazing financing options.