Whether you like flashy sports cars, conservative everyday rides, or practical minivans, financing them is never easy (In most cases). For a lot of people, the excitement they get when they think about their dream car ends abruptly when their thoughts get to the point of financing it.
The problem is that most people can’t afford to pay out of pocket. So in most cases, their dream car ends up just at that – a dream. However, do you know that there are options you can explore to turn your motorized dreams into reality?
Understanding all your financing options and how you can get the most out of your finances will save you lots of headaches and debt down the road. Here are 4 smart ways to finance your next car.
Set A Budget For Your Auto Loan
If you don’t have a monthly budget, it’s time to create one. Ask yourself how much you can afford to pay for a car.
After this, you should assess all the monthly debt payments you currently have eg rent, student loans, and other expenses in order to determine what you need to achieve your goal.
Your car payment calculations should include not only the amount paid back to the lender, but also gas, insurance, and other maintenance fees.
Review Your Credit Score Before Heading To The Dealer
Paying off your debts and making payments on time can improve your credit score over time, and a good credit score can lower the amount of interest you’ll pay on your car loan.
Your credit score can also impact the type of car loan you can get because having a good credit score can make you eligible for a higher loan amount.
Check your payment history, debt-to-income ratio, and the history of your credit lines as these affect your credit rating score. If there are any issues with your score, start fixing them in order to bring your score up when it does come time to apply.
Explore Your Auto Loan Options
There are two main ways to get a car loan: direct lending and dealership financing. After picking out the car you want to buy, consider which option makes the most sense for you.
With Direct Lending, you get a loan from a bank, credit union, or other lenders where you agree on the amount of the loan and the finance charge, or interest rate that you’ll pay on the loan, while Dealership Financing is when the dealer contacts their lender of choice and helps you to arrange a loan for the car.
They make all the arrangements while you do very little. Sounds ideal!
Keep The Loan Term As Short As You Can Afford
Try to avoid this because the longer you take to repay a car loan, the more interest you’ll pay. But that’s not all. Many times banks will charge higher interest rates for longer loans, further increasing your cost of credit.
It’s tempting to stretch out an auto loan over five or even six years to get to a more comfortable monthly payment, but this means you’ll pay a lot more in interest and almost certainly be upside down on your car for nearly the life of the loan.
Set up automatic payments for your loan so you can ensure you never miss a payment.
Are you looking for the easiest way to buy your dream car? Apply for the Rosabon Consumer Finance Lease today and get your desired car with the best payment structure for you.