With the vast number of new vehicles coming on the market every year, the main challenge isn’t finding the right one for you, but also to find the one you can afford. Most people have to borrow money to buy a new car. The economy being what it is, few people can dish out the cash needed to pay for a car out right. Therefore, new car loans are the only real option. Before talking to a potential lender about a loan, there are a few things you should consider.
Your budget
Your budget should be your first consideration. How much can you comfortably afford to pay every month? Once you know that you can start searching for financing deals that fit your budget. The interest rate and payment schedule are important factors, but specific stipulations also need to be considered. Is there any part of the agreement you won’t be able to live with? Another factor you need to seriously consider when buying a new or used car is the amount of down payment. Figure out how much you can afford, but keep in mind, the more the better. The more you can put down, the less you have to borrow. This could save you hundreds in interest!
Length of the loan
The length of your car loan is an important consideration. The lower your monthly payments, the longer time it will take to pay off the loan. This is good if you are on a tight budget, but will cost you more in interest. If you can make higher monthly payments you will be debt free sooner! You need to decide which method works best for you. Once you have your strategy figured out you are ready to approach lenders. And remember, new cars may come with a higher price tag, but in many cases cost less than a used car in need of many costly repairs!
Don’t miss payments
Once you have found the car you want at a price you can afford, secured your loan and taken possession of your new car, the only thing left is the payments. Missing even one payment puts a black mark on your credit. The more payments you miss the more black marks. Over time this has a very bad affect on your credit score. Your lender has trusted you with their money, now it is your responsibility to justify that trust. You don’t actually own your car until the loan is repaid. If you miss too many payments your loan is in default and the lender can repossess the car. If you fall upon financial difficulties, it is better to talk to your lender and come to a mutually agreeable solution before you start missing payments.