Whether you need a reliable vehicle to get to and from work or just want something comfortable to shuttle your kids around town, buying a new car can be an overwhelming experience. Since most people do not have thousands and thousands of dollars ready to pay cash, financing can be helpful in purchasing your new vehicle. With these tips, you will know how to get the best financing deal on your new ride.
Know Your Credit
One of the most important things to do before applying for an auto loan is to check your credit score. If you have bad credit, lenders will either deny you or approve you for a loan with a high-interest rate. While you may be happy about the approval, high-interest rates will cause your monthly payment to increase, which you may not be able to afford.
A few months before you plan to buy your new vehicle, check your credit report to make sure you do not have any charge offs or collections. Pay off or pay down any high credit accounts, as well. Working on your credit report a few months before you want to buy will give the credit agencies time to report positively.
Know Your Trade
If you are trading your old car into for your new vehicle, you will need to do some research to determine its value. The value of your trade can either make or break a deal on your new vehicle, so proper understanding is important.
To get started, find the True Market Value of your current vehicle before going to the dealership. You will need to spend some time entering your vehicle's information including year, make, model, and each option and accessory into the system. This will ensure you receive the most accurate appraisal.
Clean cars will always be more appealing to buyers, so make sure to have your vehicle washed and detailed before arriving at the dealership.
The dealership will offer a set amount for your vehicle to use as a trade in for your newer car. This amount is not always exactly what the True Market Value you received from your own research. However, you and your dealer can work together to find a middle-ground.
Know To Negotiate
Financing can be a bit difficult if you have negative equity in your car. Owing more than what the dealer will give you for the trade will result in financing a higher amount for your new vehicle. This will also increase your monthly payments.
To prevent an excess amount of negative equity, ask the dealership about rebates and current promotions on the new vehicle you want to purchase. The rebates could potentially mask the negative amounts.
It is important to note that many financing companies will only allow one promotion. You may need to choose between rebates and zero percent interest plans. Zero percent financing will help you pay your loan off faster. However, if you do not plan to keep the vehicle for the entire life of the loan, taking the rebates to cover the negative equity may be a better option.
Buying a new car is a fun experience, but proper planning is smart. With these tips, you will learn how to buy a new ride in a smart manner.Share