If you’re thinking about getting a pre-owned vehicle in the near future, one of the biggest things that you should be figuring out is how you plan to finance this purchase. Depending on your current, future, and past financial situations, the options that you have available to you for financing will vary. But to help ensure that you make the best possible choices regardless of where you’re coming from, here are three things to consider before financing a used car.
Know The Total Price You Can Afford
Before you start looking at the type of car you’ll want to buy, the very first thing you should think about is how you’ll pay for whatever car you wind up getting.
To start out, Gerri Detweiler, a contributor to Credit.com, shares that you’ll need to figure out the total price that you can afford for the entire process of buying a car. For some people, it’s easy to forget that you’ll have added expenses on top of just the purchase price of the car. So when you’re thinking about how much you can afford, make sure you have the whole picture in mind. Usually, this will include things like taxes, fees, a warranty, and more.
How Your Credit Score Looks
How you’ve handled yourself financially in the past will have a big impact on what your financial future looks like, including how you’ll be able to finance a vehicle.
To know the likely circumstances you’ll find yourself in as you seek out financing for your new car, it’s wise to take a look at your credit score. According to David Weliver, a contributor to Money Under 30, the higher your credit score is, the more favorable your financing options will be. So if you have bad credit, you may still be able to finance a car, but you’ll likely have to pay a very high interest rate in order to qualify.
Your Down Payment
The amount of money you put toward the car as a down payment can also have a big impact on how the rest of your financing goes. It could potentially bring down your monthly installments, reducing your financial burden. However, you should keep records of all your payments down to the cent, because sometimes companies may wrongfully reposses your car due to a financial error. In such cases, contact a Massachusetts Repossession Lawyer or a similar lawyer near you to help you sort out the problem. Your vehicle loan also depends on your credit score, prior DUI records, and other concerning factors. Keep all of them in mind and ensure you get the best possible deal.
Not only may you be able to qualify for a larger loan for a more expensive or newer vehicle if you have a larger down payment, but John M. Vincent, a contributor to the U.S. News and World Report, shares that you’ll also be in a better place financially with a larger down payment. You’ll own more of the vehicle outright so that you will decrease your chance of being upside-down on your car loan if and when you decide to sell this new vehicle in the future.
To help ensure that you’re in the best spot financially when you’re ready to buy a new car, consider using the tips mentioned above to help you prepare for the financial aspects of purchasing a vehicle.