Tips For Smarter Car Shopping
Like a mortgage, purchasing a car is a big life investment and one that will affect your credit for years to come. If you are in the market for a new car there are a few things you can do to make sure you make the smartest choice for your financial life.
Shopping for a new car can be a stressful task with far too many options. It’s easy to get carried away by fun features and the fantasy of owning your dream car. Before you start shopping here are a few things to consider to keep your finances in check…
Like applying for a mortgage, getting pre-approval for an auto loan is a great first step. If you want a good idea of how much interest you will be paying it may help to get pre-approved before you start looking. Pre-approval will also help you get an idea on how much car you can afford.
Don’t Go For A Long Loan
Lower monthly payments can be alluring but who wants to be making payments for 6 or 7 years?! When considering how much you can afford be sure to look at the 60-month repayment options or lower if you can. If you are paying the absolute maximum you can afford per month and you are paying on a long loan then you probably cannot afford the car. The sooner you pay off the car the sooner you won’t have payments.
Make A Significant Down Payment
When purchasing a new car you should be making a down payment of at least 10 percent, ideally much more. Once you decide you might need a new vehicle you should save for at least a few months to get together a hefty down payment. A larger down payment will lower the amount of the loan and make your monthly payments much more manageable. More manageable payments will make it much easier for you to stay on track and on time down the line, which will only help your credit.
Research The Vehicle
If you find a vehicle that fits all of your criteria now is the time to do some solid research. Does the model have known flaws? Have other owners found it reliable? Have other owners identified any maintenance issues? The car may seem great but other owners may have found it expensive to maintain. Avoid any regret by being thorough in your research before you sign.
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