Generally, having a car is awesome. Not only because it means the freedom to go wherever you want – whether it’s weekly drives to memory care facilities to volunteer or unplanned road trips with friends- but also because it gives people more confidence and security. But cars don’t come cheap and financing can be tricky, so here are some tips to help you make sure you get the best deal.
Know Your Credit Score
The higher your credit score the easier this will be for you. As your credit score is essential for securing financing for a vehicle, you should know your score before applying for any loan or auto financing plan.
There are different ways to find out what your score is. You can get one free report every 12 months by visiting AnnualCreditReport.com or you can use a third-party service to monitor your credit score regularly. Ideally, to qualify for financing your score should be around 700 or higher.
Consider Your Options
There are several ways to finance the purchase of a car. You may be able to get a loan from a bank, credit union, or other financial institution. Alternatively, you can lease the vehicle or enter into an auto financing agreement with a dealership. Each option has its own pros and cons, so make sure you evaluate the best choice for your financial situation.
For example, while credit unions are often more favorable for those with lower credit scores, the downside is that they often have lower loan amounts. Or, if you’re leasing, you don’t have ownership of the car and could be stuck paying high rates if you decide to keep the vehicle beyond the lease period.
Shop Around for the Best Rates
Once you have your credit score and your loan provider, look around to get the best financing rates available. Don’t just accept whatever interest rate you are first offered; shop around and compare different offers before making a decision.
For example, you can find competitive rates online by using a car loan calculator. Make sure to read the fine print for any hidden fees, as sometimes these can add up and increase your overall cost.
If you’re buying from a dealer, you might be able to negotiate on the interest rate or other fees. It’s important to do your research and know what kind of deal you want before going in, as dealers can be tricky and try to pressure you into accepting an unfavorable offer.
Some helpful negotiation tips include:
- Don’t reveal your budget
- Be polite but firm
- Request a breakdown of all fees involved
- Do not sign any paperwork until you are certain
No matter which financing option you choose, make sure you are comfortable with the terms and conditions. Always read all of the paperwork before signing and get everything in writing. With these tips, you can be confident that you are making a smart decision when it comes to buying a new car.