Buying a Car? What You Need to Know About Financing Your New Set of Wheels
Thursday, March 2, 2017, 6:00 AM | Leave Comment
There often comes a time when you’ll need a new car to use for a reliable mode of transportation.
Most people need to take out a loan to purchase a new vehicle through a dealership or private seller.
When you’re ready to search for a car that meets your needs, there are a few facts to understand about financing your new set of wheels.
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Increase Your Credit Score
Increasing your credit score will reduce the interest rate that you pay, which can save hundreds to thousands of dollars until the loan is paid off.
Increase your score by paying off your outstanding balances and by avoiding late payments. It’s also important to inform the credit bureaus of any errors that are on your report.
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Determine What You Can Afford
One of the most important parts of financing your new vehicle is determining what you can afford to ensure that you don’t miss any of the payments.
Most experts recommend that you set aside 15 to 20 percent of your monthly income to put towards a vehicle.
It’s also important to factor in extra costs that come with owning a car, which includes car insurance, registration fees, fuel, and maintenance or repairs.
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Save for a Down Payment
Your down payment will influence the monthly payments of the auto loan. Save at least 20 percent or more for the down payment on the car to ensure that you can be approved for the loan and have a lower interest rate if you pay more money upfront.
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Maintain Your Employment History
Lenders approve borrowers who have at least one year of employment history to ensure that they can make payments on the car and aren’t at risk of a job loss. Avoid changing employers or becoming self-employed after submitting an application.
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Get Preapproved
Make it a point to get preapproved for your loan before shopping around to ensure that you know what you can afford when obtaining a loan through a dealership like Markosian Auto.
Falling in love with a car before you secure the funds can make it difficult to find a model that you’re satisfied with if you need to adjust your budget.
When you’re ready to buy a car, the financing process is one of the most important steps to finding a vehicle that suits your needs. With the right steps taken, you can enjoy making a purchase on a car that you can drive for many years to come.
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