What You Need to Know About APR & Loans Before Buying a Brand New Car
Friday, December 15, 2017, 12:00 PM | Leave Comment
For those looking to buy brand new cars, financing is a good option. There are many things to take into account when choosing a lender.
Here are some steps to take before purchasing a new car.
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Check Your Credit Score
Knowing your credit score gives you more leverage in securing the best financing available.
A higher credit score can mean that lenders will fight over you. This means that you can get a lower interest rate on your loan.
There may even be other incentives to encourage you to do business with the lender. Some dealerships may offer a zero percent interest rate if you have good credit.
Even if you have a lower credit score, you may still qualify for a loan. You will likely need to put more money down in order to secure the financing for a new car.
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Set a Budget
When shopping for a car, know what you are willing to spend.
Look at a new car inventory to see the type of vehicle that you’ll want to go for.
Take into consideration that car insurance rates can vary on different models of cars. Don’t just take into consideration the monthly payment amounts that you can afford. This is often the trap that many consumers fall into when financing a car.
You need to look at the total cost of financing a vehicle and not just the monthly payment. Set your budget before you go to dealership and stick to it.
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Get Preapproved
Shop around for the best loan. Check with credit unions and other banks. The dealership might even offer you a better rate on certain vehicles during different times of the year.
It is to the lender’s benefit if you don’t pay back the loan amount early. They make more money from you paying on the loan for a longer time frame. To avoid this mistake, make sure that there aren’t any prepayment penalties on the loan contract.
Having a preapproved amount can help you make a good purchasing decision.
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Read the Fine Print
Many loans focus on the Annual Percentage Rate (APR). This is the amount of interest that you will pay each year on your loan.
The interest rate is the current cost of you borrowing the money for your loan. The APR is more accurate because it takes into account any lender fees that are added to your loan.
The amount that you borrow to purchase your car is called the loan principle or sometimes the financed balance. The contract will break down the total amount that you will be spending for the loan.
Being prepared before going to the dealership can save you a lot of hassle. Use these steps to make your car buying experience as smooth as possible.
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Hannah / Freelance Writer
Email: hannahwhittenly@gmail.com
