Most people want to own cars, for sure. But not everyone has the financial capabilities to do so. In other cases, drivers settle for owning used cars. Still, financing used cars …
Most people want to own cars, for sure. But not everyone has the financial capabilities to do so. In other cases, drivers settle for owning used cars. Still, financing used cars requires considerable amount of money. So, for those who are thinking of getting a new car, the following guidelines may provide some help:
- Check your credit score
Fortunately, for those with poor credit score, they will still likely be granted a car loan though at possibly higher rates. Thus, people should realize that car dealers normally offer low interest rates to drivers with good credit score, that is, 700 or above. So, before applying for a car finance, one is advised to ensure their good credit standing first.
- Compare quotes
There are a number of car dealers out there, and people should not hesitate to compare quotes to determine the best deal that they can get. When comparing quotes, the factors to be considered include the amount a dealer is willing to loan, the term period, and the interest rate.
- Settle for a short term
People can save more money if they pay their loans in short-term arrangements because they will pay less interest compared with that in long-term payments. Although 5 years is a long time to pay off a car loan, the increment in interest can accumulate, thus posing additional burden to the debtor.
- Allot a big down payment
For any type of car purchase, a 20% down payment is recommended, which is already a considerable subtracted from the loan. In addition to decreased payments, car owners may be given lower rates if they allot a 20% down payment for their vehicle purchase.
- Pay in cash
If possible, car owners are advised to pay various car purchase fees, including sales tax, in cash. Paying these fees in cash will lessen their loan burden and of course, prevent the accumulation of additional interests.
- Settle for a non-recourse loan
The conditions for a default loan give financing companies the right to repossess a car. In such case, car owners will be left with a deficit given the decreased value of their car. To avoid such situations, car owners should choose a non-recourse loan, which essentially protects them from paying the difference in their loan and the amount of their car.
Vehicles are now a necessity for transport to different locations. So, it’s not surprising that a lot of people dream of owning cars. Those who settle for used vehicles should equip themselves with knowledge to ensure that they get the best car deals but at the lowest prices and interest rate.