The purchase of a brand-new car is undeniably a big commitment. You’re spending your hard-earned money on something that you will depend on for the next couple of years at least. A lot of the time, most people put all of their focus on actually choosing the car and end up neglecting a crucial aspect of the process: financing.
You will often hear horror stories about auto financing from loved ones and even online blogs. However, don’t let this deter you from ever taking out a loan to purchase a car. The key is to be smart about. Remember, most cars depreciate in value and therefore cannot be counted as an investment. Hence, it wouldn’t make sense for anyone to spend beyond their means in the hopes of making money in the future.
By following our helpful tips and carefully considering all aspects of the financing process, you’ll make sure that your auto financing experience is a great one:
Consider Your Credit Score
We know what you’re thinking, why worry about credit score since you could still qualify for an auto loan even if yours isn’t all that great? First of all, the reason finance companies are so lenient when it comes to auto loans is because if you don’t keep up with your payments, your car can be easily repossessed. That it isn’t quite the case when it comes to things like home loans.
‘But why does that matter as long as I keep up with my payments?’ you may ask. The truth is that if you have a bad credit score, the interest charged and therefore the repayment amount is going to be much higher. Hence, it might be harder for you to consistently keep up with car loan payments.
A bad credit score doesn’t mean that you have to give up on buying a car. However, we advise you to find to factor in the additional interest to your repayment amount and budget accordingly. Most dealers like Berwick Haval have their own finance calculator that allows you to do this.
It’s an amateur mistake to just go for the first loan you get approved for, especially if you have a good credit score. Therefore, we highly recommend that you get in contact with a variety of different lenders and get quotes from each of them before you come to a final decision.
Go for Short Term Loans
While it can be tempting to reduce your monthly payment amount by going for a longer term, you’ll end up paying way more in the long run due to accumulated interest. Hence, we recommend that you go for the shortest term that you can afford.
Make A Huge Down Payment
A great way to reduce the amount you owe is to put down a cash down payment that’s 20% or more of the total price of the car. This way you’ll help yourself settle your auto loan much quicker.