Most of us aren’t lucky enough to pay for a car in cash – even if we wanted to, we would probably have to settle for a car loan or financing deal. But while getting financing or a loan is a pretty standard affair for most car owners, it doesn’t mean that you have to settle for a deal that’s not the best deal for your needs. While you know that you have to pay a monthly fee for the loan, you can fix and arrange it in such a way that your car financing or loan is maximized – and is the right fit for your needs. So how can you make sure that your car financing deal is the most suitable one for you and is something that you can really afford? Here’s how you can get the most out of your car financing deal if you are buying a car.
Why considering the financing terms and options is important
Not many of us consider financing seriously, and this is one reason why some of us end up getting a less-than-perfect deal. Think about this: if you are on the lookout for a new car, there is a big difference between the car’s sticker price and the invoice price of the dealer. If you pay attention to how you negotiate, you could save a significant amount on the sticker price of the car. But then, if you choose to finance the car at 6% for four years with no down payment, you will likely end up paying more than $2000 in interest. But if you finance the vehicle with a $1500 down payment for three years at a 4% interest, you may be able to save more than $1000. See the difference? Along with negotiating the price of the vehicle, pay particular attention to your financing terms so you can save more in the end.
Know your credit rating before doing anything
If you would like to make the most of your car financing deal, know your credit rating before doing anything – and this includes prior to looking for the car of your dreams. This is perhaps the best time to learn more about your credit score and rating so you don’t end up paying such an excessive amount for a loan. The thing about car loans is that you can easily get a loan even if your credit score isn’t that great, simply because lenders know that they can repossess the car anytime. But if you have bad credit from the beginning, lenders may give you a higher interest rate, which isn’t good in the long term. If you have good credit and you apply for a loan, chances are, you’ll be able to get a lower interest rate and a better deal overall. If your credit score or rating is high, you may be able to get 2.9, 1.9, or even 0% interest on new cars from dealerships. But you can only get this if your credit score is at 750 or higher. If you have a below average credit score (below 650, for example), then you may get interest rates as high as 10%.
Keep it short and sweet
Here’s another thing you can do to maximise your car financing deal: keep it as short as possible, as confirmed by renowned car dealerships in Layton Utah such as Young Automotive. The shorter the term, the better for you. Of course, if your term is short, this means you will have higher payments per month, but by the end of the loan term, you can save more money. Remember that the longer the term, the higher the interest will be, so the ideal term time would be around three years.