Whether you need a new car or want a new car, the idea of buying one is usually pretty exciting. Notice I said the “idea” of buying one is exciting, the reality is often a little frustrating and can get you into some trouble if you are not prepared from the start.
Any large purchase should be approached with caution and you should always do some research first. Researching your options for the kind of car you want and can afford, as well as researching the lender that will give you the best deal on a loan is very important. Don’t be giving your money away! Follow these steps to get the best deal that you possibly can.
Research Your Car Loan Properly
Take a look at the kind of car you want AND can afford – Look online for cars that have the features you need first. Then, begin to pick out those that are within your price range. You should have an idea of how much you can afford, and keep in mind that the less you borrow, the lower the monthly payment will be. Write down the make and model of those that have the features you need, are in your budget, and that you would feel good about driving. Keep yourself from any impulse buys by knowing what you are looking for before ever heading out to a dealership.
Know What Your Credit Score Is
This is going to play a large role in your ability to secure a loan from the bank. You need to get a copy of your report from all three credit bureaus: Equifax, TransUnion and Experian.
Get Your Free 3-in-1 Credit Score
If you see anything that is incorrect on any of those reports, now is the time to get them fixed. When the credit bureaus properly report any reconciliation of debt, that will only help you when comes time to deal with the bank. Your credit score is directly tied to the interest rate you will be charged, so this step is not one to take lightly.
Create a List of Lenders that you Could Work With
Just about all lenders and banks are online nowadays, so take advantage of this and start with your local bank. When you have an established account with a bank, they usually want to keep your business. This can certainly work to your advantage, so start there. You can then fan out to look at other local banks, then any national lenders that you would feel good about working with. You may want to keep your list to about 5-10 lender options.
Save Money for the Down Payment
It should come as no surprise that the larger your down payment, the less money you have to borrow, which in turn makes it easier for you to be approved for a loan. Depending on your situation, you should save as much money as possible before heading over to the dealership.
Negotiate with Confidence
If you have gone through all of these previous steps, you know enough to feel confident about negotiating. Remember, they want your business, so you are in a position to try to get them to give you the best deal possible. If you have done your research, you should know the parameters of the loan you can actually get and it can’t hurt to ask for a better deal that the first one they offer. You’ll know when it’s a deal you should agree to.
Buying a car is ripe for opportunities to mess up and end up with “buyer’s remorse.” Don’t do this to yourself! Conduct the proper research and know your options going into the buying phase – you’ll thank yourself later.