If you’re looking for extremely low rates to finance a new car, you have to make sure that it is not the only thing you are looking at. Remember that a car dealer gets a better deal when financing your car, than getting paid for it in cash; unless the lender pays for it and you have to pay the financing company on your own. So, it wise to consider the following things when planning to tie up your finances with car loans.
Financing a new car may or may not be a good deal depending on the following circumstances:
- Credit report. It’s easy to get favorable loans when your credit is good. But, what about if you have a bad credit? You can still get a car loan by doing the following things:
- Know your credit score to know where you financially stand.
- Check your credit report and correct erroneous entries. If there are problem areas in your report, lenders may be hesitant to lend you money.
- Find a reputable lending company by checking their business in the business bureau, and reading reviews about the company. Good lenders can tell you not only the monthly payment, but the interest rate, loan terms and other hidden fees. It is advisable to work with companies that lend to people with bad credit.
- Employment record. When you are hopping from job to job, lenders may not give you the best deals. But, if you have a stable employment, and you have extensive list of assets, the lenders may look at your application favorably.
- Outstanding debts. If you have big debt loads and you have financial capacity to cut it down, pay the high-interest loans first and pay off your smaller debts to give some allowance for your payments. This way, you will not only improve your credit score, but your monthly finances as well. Close unused charge accounts and credit cards, except for your oldest credit card.
- Budget. If you have earned adequate amount of money and it is sitting there for you to use, why not pay in cash?
If you don’t want to spend more than you earn each month, then getting car loans may not be your best choice. Paying in cash can help you handle your budgets well because you don’t have to pay for the interests. But, if you don’t have large amounts of cash and you really want to buy a car today, then a car loan can help you get it.
Avoid getting car loans unwisely. Remember the cost of debt. It can leave you in a financial mess if you don’t know what you are getting into. Don’t succumb to the temptation to apply for car loans which are beyond your means to pay off.
When you apply for car loans always do the math. Figure out if the interest rates, associated fees and loan terms are worth the cost.
For more information, contact us and we will help you find a loan solution that works for you.