Buying a new vehicle is always exciting, and there’s no reason that it should be financially stressful. To enjoy the car-buying process, it’s important to do your research, set a budget, and know your financing options while you search. Here are some helpful car financing tips to help you feel prepared to finance your new ride.
Set your budget with the short-term and long-term in mind: When taking out an auto loan, you have to decide what monthly loan payment is affordable to you. While this is a crucial short-term consideration, you should also consider how long the loan term is. The longer you finance your vehicle, the more interest you pay, so don’t set the lowest monthly payment as your top priority.
Shop around for the best loan and interest rate: Although having a lender run your credit may ding your score, the drop is usually negligible — and nothing compared to your potential savings from shopping around for a loan. This is particularly important if you have a less-than-stellar credit score, as you’ll want to find the lowest possible interest rate.
If you have great credit, look for special offers: Believe it or not, if you have great credit, you can qualify for a car loan with a zero-percent interest rate.
If you have sub-par credit, save up a large down payment: A weak credit score typically means a higher interest rate, so it’s a good idea to reduce the total amount of the auto loan by putting down a large down payment.
Consider CPO: Hunting for a new vehicle means you value the convenience and cutting-edge technologies that they offer, but there’s another option you should consider: Certified Pre-Owned. Certified Pre-Owned vehicles come from recent model years and offer the latest and greatest vehicle equipment and technologies. Better yet, they tend to come at a lower price than new vehicles. With a CPO vehicle, you’ll likely still get everything you want while also reducing the amount of your auto loan.
Want to learn more about buying a car? Visit our finance department at Terry Reid Mitsubishi.