Stop Your Car from Drowning You in Debt!
The way you approach buying your car could mean the difference between owning a car you can afford and struggling to make the car payment each month. You don’t have to settle for the cheapest car on the lot in order to stay within your regular budget. You simply need to understand that you have several options that could save you money on your car in the end.
Don’t Settle for the First Offer
Car loans are competitive, just like any other purchase. Lending institutions are constantly changing their terms or offering special deals to entice customers to choose them when it is time to buy a new car. Make sure you do some research into the different rates and deals offered through several lending institutions before you make a final decision. If you decide to accept the dealer’s financing without looking into your options, you could end up paying thousands of dollars more than you needed to pay for your car. It is best to do the financial research before you visit the car lot so you won’t fall in love with a specific car before you find a great deal on rates.
Pre-Qualify Before You Shop
You will be a more powerful car shopper if you walk on the dealer’s lot with a pre-qualified loan in hand. The pre-qualification will provide you with a specific price range that you can comfortably use to choose the right car. You will also cut through the waiting period and much of the paperwork if you have already secured your car loan. Getting pre-qualified will also allow you to find better interest rates or lower monthly payments than you might otherwise get through the dealer’s financing.
Make a Larger Down Payment
Every dime that you spend toward your down payment goes directly toward the principle cost of your car. Try to make the largest down payment possible so that you can reduce the amount of interest you will pay over time. A large down payment can help you reduce the length of your loan and bring down the monthly payments. The longer your loan period is, the more you will eventually pay for the car. Anything you can do to reduce the amount of interest you owe will keep the cost of the car down and help you avoid getting in over your head.
Shop within Your Real Budget
It can be tempting to accept a longer loan so that you can buy a more expensive car. Every extra month you tack on to the loan period adds another interest payment to your car’s price. Establish a realistic budget for your car payments before you visit the dealer, and stick to that budget while you are shopping. It might be tough to pass up that more expensive model, but you will appreciate your disciplined purchase when you have the financial freedom to pay for your car and keep up all of your other expenses as well.
Jessica Bosari writes about personal finance and cars for CarInsuranceQuotesComparison.com. The site helps consumers compare car insurance rates to get the best price on car insurance every time.