Its an unfortunate reality for many American families. Your once-reliable car starts to nickel-and-dime you and its time to buy a new car before costs really add up. But your credit has seen better days. What do you do? These three steps can help when you set out to buy a car.
1. Check Your Credit Score & Report
If you might be looking to finance a vehicle, it is important to know where you stand in terms of your credit score and payment history. Unfortunately, if you made bad credit choices in the past, these could creep up during the loan approval process. Knowing any potential weaknesses on your credit report will help prepare you for the loan negotiation process.
2. Research Auto Rates
In todays market, many people with imperfect credit can still qualify for auto loans. The auto industry took a big hit over the last few years and auto dealers are looking for any way to get you into a new vehicle.
But before you start test driving that shiny new sports car, understand that with a less-than-stellar credit score, your auto loan might come with a higher interest rate or unfavorable payment terms. Research the auto loan rates offered at your local bank, credit union or other lending institution before you agree to the rate offered at the dealership.
3. Calculate Your Finances
Dont focus on only the sticker price or only the monthly payment. Many auto dealerships are notorious for tacking on additional costs and packaging them into the loan installments so they seem barely noticeable. Before you know it, you could be adding hundreds, if not thousands, to the price of your new or used car.
To make sure you can afford your new car, account for monthly payments, insurance premium increases, gas and vehicle maintenance costs. If you commit to a monthly payment you cant afford, that will likely only put more stress on your finances and you could be at risk for falling behind on payments.
Securing an auto loan and always making the payments on time is one step towards building healthy financial habits. It shows lenders that youre a responsible borrower who can handle your commitments. If youve done the research and are confident you can afford the monthly payments and expenses and are ready to take on new financial responsibilities, drive safely and enjoy the open road ahead.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2013 ConsumerInfo.com, Inc. All rights reserved.