Before buying a car, it’s very obvious that you have done your research about selecting the right model. But the way to afford your dream car also goes in hand to hand with your financial situation and we will discuss ways to save your money before buying a new car.
· Scrutinizing The Credit Scores:
W While planning on getting the financing done for the car, the credit score is the most important factor in getting one with lowest interest rates. Your credit score apparently reflects your financial image and your risk factor and lenders go through these hard facts before deciding upon a rate or whether to at all lend you the money. So, it’s always advisable to check your credit scores, now for free at my company’s website, CreditKarma.com or on other sites. Do check and aim that your score remains above 720 credit score because that remains a yardstick for getting the best interest rates.
· Figuring Out The Spending Structure:
While making a decision on purchasing a car, deciding upon the budget is important because it makes you realize whether you can afford it or not. First, take the net income of yours and calculate a 10 to 20% of that for your monthly car expenses. Now everyone’s living standards and situations are different so percentages can vary but this 10-20% rule remains a baseline for budgeting.
· Saving For Down Payment:
Keeping a fund handy to pay off the down payments is always justified. This can be explained like this, if you don’t have a good credit score, chances are more that you may get a loan only with a down payment option. Also interest rates depend on the credit scores so in a case of high interest rate, paying off more in down payments will potentially save hundreds of thousands of dollars. That being said, though down payment while buying a car is not mandatory but definitely strongly advised. If the down payment rate is 20%of the car’s price with 10% being the minimum rate for refurbished cars then the average price of the new car was more than $35000 in 2018 where $7000 was needed to make as the down payment. So, you may keep saving for the down payment or select from ales expensive car.
· Choosing From Different Financing Options:
One can always make full cash payment to buy a car, thus negotiating on the price but realistically speaking that number of people are very few. So it’s better to do an extensive research to avail the best option and to get the sweetest deal. Dealer sponsored financing is easier to find, but they never gives you the best rates so it is always better to look into local banks, credit union where they have more open financing policies and gives you a much lesser rate than dealer sponsored deals. So never shy away from researching and comparing various auto loans, carefully monitoring the loan term, the APRs as well as if there is charges, fees or penalties. Also, if you get sanctioned of a pre – approved loan, you get the upper hand while negotiating for a good price. Always try to keep the loan tenures to five years or less because longer the loan term, the interest costs keep on skyrocketing. Also try keeping a buffer time before making the purchase so that you have abundant time to choose a financing option else there is always chance that you will fall prey to a dealer’s loan and his terms because you ran out of time.
· Planning the Trade – In:
Privately selling or trading your used car is a very popular way to fund the down payment in cases of requirements of a new car, provided it is in a decent condition. You can visit a marketplace like CarMax or trade at the dealers where they will trade – in for a financed car or will give you a loan while you will be paying off for your old ride. But the best way to sell the car will always be a trade-off between getting the highest bid for the vehicle and convenience. Though a dealer will save up you time and hassles compromising your price though. So if you are a newbie it will be better to sought after a dealer because finding the right customers can become quite a challenge. However Kelley Blue Book’s is nice place for such new players to explore and to get a decent offer.
These are the top 5 steps to become a pro for a car purchase!