Car Financing 101 - What You Need to Know Aug 24, 2011
Are you thinking about taking the leap… and buying a new (even if only new to you) car? Well first, congrats! Buying a new car is a fun and exciting adventure, if you know what you’re doing. In today’s economy getting a good deal on a car can be tough. However, if you do your research, set a budget and consider these tips, you’re likely to score big.
So, without further ado: Car Financing 101
1. Know The Condition of Your Credit
If your credit score is less than perfect, make sure you’re aware of the challenges that come with that. Research the lenders you’re considering to determine whether or not they can meet your needs.
2. Consider Lining up Your own Financing
Walking into a dealership with financing already taken care of gives you the advantage. Not only will you be able to focus on negotiating the price of your car, you’ll like be able to get a better deal. In fact, some automakers actually reward you for setting up your own financing.
3. Stick to Your Budget
You created a budget for a reason (because that’s what you can afford)—so stick to it! Especially in an economy like this, it’s not wise to stretch your budget. Cars have improved over the years and many features once reserved for luxury cars are now available in more standard models.
4. Don’t Share Your Desired Monthly Payment
Nine times out of ten a dealer’s first question will be, “How much are you looking to pay each month?” Don’t answer that! Keep that number in mind—but negotiate your purchase based on the selling price of the vehicle. This will keep them from offering up extended finance terms that will cost you money (in interest) in the long run.
We hope these tips will help you as you set out on your first, next or last car buying adventure!