Do you break out in a cold sweat when thinking about financing your new car? The good news is that new car financing isn’t as scary as you may believe. In fact, when you follow these tips, the financing process is as smooth as butter.
Know Your Credit Score
Before you walk into a new car dealership, be prepared. Knowing your credit score is one way to be prepared. It gives you an idea of what type of interest rate to expect. Better credit scores get cheaper rates, but that doesn’t mean that a bad score is going to keep you from getting a new vehicle. You can get a car loan with bad credit. However, if you’re looking for a lower rate and you have a less-than-perfect credit score, consider waiting to make your new car purchase until you’re able to raise your score to a number that will get you a lower interest rate.
Begin the Application Process Online
No one wants to spend hours at the car dealership waiting for paperwork to be completed. While car purchases do take time, you can get a head start by beginning the process online. Many dealerships offer online pre-approval and other types of application processing from the comfort of your home. If you’re short on time, this helps streamline the car buying process and gets the keys to your new car in your hands faster.
Sometimes, you have no choice but to shop for a new car because your current vehicle died on the side of the highway. However, it’s always better when you can plan for your new car purchase. This allows you to shop around for the lowest interest rates, save up a sizable down payment to keep your costs low, and quite possibly choose a shorter term car loan that saves you thousands of dollars in interest payments.
Pay Additional Fees in Cash
When you purchase a new vehicle, you have the added costs of sales tax payments and possible documentation fees. Some lenders will allow you to add these costs to the loan as part of your monthly payment. However, this practice not only increases the loan amount, but it also means you’re paying interest on these fees. Over the course of the loan, you’ll end up paying more than if you paid for these expenses with cash even if this means using part of your down payment to cover the sales tax and other costs.
When buying a new car, it’s important to be strategic about the buying process. Doing so means you’ll get a better deal and have fewer regrets. You also might actually end up enjoying the financing process.