Auto loans: useful guide for beginners
by Groshan Fabiola I try to cover as many topics as I canA car purchase includes
many steps, starting with exploring different models and making the right
choice and ending with a fierce negotiation for obtaining a good price. Like
everyone else, you probably focus your attention on getting the best deal and
overlook shopping around for the most convenient auto loan. Well, this
represents a major mistake. You should not compare walking into a dealership
with walking into a department store because the latter demands great
responsibility, planning and a more substantial budget. Therefore, you should
react accordingly and prepare yourself in advance for the process, which is
quite similar to struggling to get a good deal: you have to begin with
establishing a budget, understanding your options in terms of auto financing, continue
with negotiating for the auto loan and ending with closing the deal. We also
have a helpful tip for you in what concerns auto loans: concentrate more on the
total cost instead of monthly payments.
Your credit is important
Applying for a car loan
does not necessarily mean that you will get it. Your
income and your credit represent crucial factors that help lenders decide
if you are a good candidate. They need to have the certainty that you are a
responsible individual and you will repay the loan on time. Otherwise, they
take a great risk if decide to approve your request for the auto loan. Furthermore,
having a good credit score will ensure you a lower interest rate meaning that
you will obtain a “discount” for the car. Thus, before applying for an auto
loan, evaluate your credit reports and make sure they save your face when going
to the dealership.
Establish your budget
This step requires
assessing your expectations in terms of cars. For instance, if you know that
you cannot afford buying the
2018 Audi3, stop dreaming about this model. Of course, you have to choose a
vehicle that fulfills your needs and suits your personality and if you feel a
special connection with this particular vehicle, consider purchasing a used one.
The main idea is that the price of the car should not exceed your financial
possibilities. Moreover, you must think about the short-term investment, which
resumes to down payment and the long-term investment, which refers to monthly
payments. If your down payment if significant, you will pay lower amounts each
month. Do not forget about the additional costs of ownership involving title
and dealer fees as well as state taxes.
Explore the auto financing options
After you determine the
financial investment you are willing to make for the much-desired car, you have
to understand your loan options. First, become familiar with the
main sources of auto financing, which include credit unions, banks and dealerships.
Shopping around for loans consists in discovering and comparing the benefits
and drawbacks of each option and this is exactly what you have to do. Avoid
getting lost in unnecessary and unimportant details. Your main interest is to
make a decision that will not leave you penniless.
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Created on Dec 26th 2017 08:14. Viewed 577 times.