Think of buying a car as a reward or as a statement of success, and not as an investment. Car values depreciate like crazy as quite the contrary and because this, it may not be a smart move to pay interest on a car loan. More often than not, the car depreciates including its value which tends to drop faster than when you repay the loan which then leaves hanging upside down or drowning underwater, especially when you owe more on the loan than how much the car is worth. A lot of individuals and this may include you, will need cars to keep up with the job demands and other responsibilities but don’t have the cash lying in your pocket to buy a reliable ride and this is exactly the reason why you get a car loan. Yes, it is appealing to the eyes to have the car you want, but there is a difference between being wise on using a car loan and using it to suffice your car greed. This article will give you tips on how to own a car through auto financing.
- Check and understand your credit score before you proceed to the dealership. One of the pro tips you need to take note is to check and track your credit report and score before proceeding to a car dealership. Because unlike mortgages or credit cards, you can still get a car loan even if you have quite a bad credit although this will need you to pay (a lot) more. You will have to check if your credit score is enough for a car loan this is because the lower your credit score is, the more you will have to make sure that you shop around and get the best rate a bank can offer you.
- Get financing quotes before you proceed to a dealership, especially if your credit is not perfect. If you are confident enough with having excellent credit, you’ll get the advantage of getting the best financing rates right from your chosen dealership. But if you happen to not have stellar credit, you may opt to try on online lenders. This will only need you to complete a credit application and you get presented with an auto quote along with your interest rate and a maximum account that you can spend on the car you opt to get. Keep the term short as you can afford. Opt to get a shorter loan term as this comes with lower interest rates only with higher monthly payments – and this is what you want. Although longer terms will give you a more comfortable monthly payment method, this will need you to pay a lot more interest and will get you almost upside down on your car for the lifespan of the loan.
Car loans are a great option especially if you cannot quite pay the car’s amount as a whole in cash. But if you are looking at a zero percent interest perspective or another really low APR, then the best way is to have your car paid with cash. Be as pragmatic as possible if you plan to get a car loan.