Financing a new car is a big deal. The biggest factors to consider when shopping for loan offers are your credit score, amount of down payment, the type of car you need, and the loan term you can afford. Buyers often forget to consider financing costs in the total amount of a new car purchase. In addition to making monthly payments, you also have to pay for repairs and how much auto insurance do I need. Take a look at some smart ways you can finance a new car and keep your out-of-pocket costs in check.
1. Know your credit score before you start shopping.
You can get a car loan regardless of your credit because lenders use your car as collateral in the event you default on the loan. The con to financing with bad credit is that you will pay a higher interest rate and total amount than you would with good credit. Dealerships are known to advertise attractive interest rates on new cars, but these offers are meant for buyers with good credit. Shopping around interest rate offers from different lenders is the smart way to get the best rate. But if your score is down, you can still avail yourself of bad credit loans from online lenders.
2. Get pre-approved for a car loan.
Going to a dealership without pre-approval for a car loan is a bad idea. Financial institutions such as banks, credit unions, and online lenders all offer different interest rates, finance charges, and discounts. Car dealerships don’t always have the best car financing options, which is why you need to compare offers from different lenders.
Financing a car is a long-term commitment that you need to be confident you can afford. Your credit history and ability to make a down payment affect your credit application and the loan amount you qualify for. The best way to determine how much financing you can afford is to use a car loan calculator. At Loans.com.au you can use their calculator to estimate your payment amount based on the loan amount, loan term, down payment or trade-in value, interest rate, and car purchase price. The online lender can help you find the best deal on car financing so that you can enjoy a lower monthly payment.
3. Choose a loan term you can afford.
The interest rate and life of the loan affect the total amount you pay for a car. Shorter-term car loans feature lower interest rates and higher monthly payments. Longer loan terms feature higher interest rates and lower monthly payments, however, this increases your cost of credit. While it may be more comfortable to take out an auto loan with manageable monthly payments you can stretch out, you’ll save more money in the long run with a shorter term.
4. Skip the add-ons.
Car dealerships will go out of the way to incentivize you to buy extended warranties, protection plans, gap insurance, and more. These expensive add-ons are where dealerships make a lot of money, and more often than not, these extra costs don’t add extra value. It makes more sense to apply the money you save on financing toward a secure vehicle storage solution that will keep your new car in mint condition.
Self-storage units offer extra space for your possessions and seasonal items and make great RV, motorcycle, and boat storage solutions. Storage units come in a range of different sizes and feature amenities such as climate control, 24-hour access, and security features. You can find affordable storage units near me with the help of US Self Storage. You can search for storage facilities in convenient locations across the United States based on average price, size, special offers, and amenities. When you find the affordable storage option for your needs, you can reserve your storage space online without the need to pay a deposit.
5. Only buy what you need.
The smart approach to buying a new car is to keep the total price under 20 percent of your take-home pay. The best way to take on an affordable car payment is to buy the right type of car for your needs. Opting to buy a used car will save you money and ensure you can get into a car that suits your lifestyle. It’s a good idea to check the Kelley Blue Book value of any model year you are considering, especially for a car with higher mileage.
The better the finance terms you can secure for a new car purchase, the more money you will save in the long run.