Three Things To Do Before Financing A Car

January 21st, 2012 Joel Beattie Leave a comment Go to comments

A car is an expensive purchase, regardless of whether you are planning to purchase a new one or a used one. It is important to do your research before financing a car to ensure you are getting the best deal and are not paying more for the financing in interest and fees than you should be. Here are some things that you can do before financing a car to make the process smoother and the financing costs cheaper for the car you desire.

Calculate What You Can Afford

There are many calculators online that can help you figure out how much you can afford to spend purchasing a car and what the monthly payments would be with different interest rates. Calculating what you can afford before shopping for a car will reduce the risk of obtaining an unaffordable loan and losing your money and your car to a loan default. It is important to remember that every charge added to the loan instead of paid for upfront will increase the amount of the loan and the amount of interest paid before the loan is paid off, so be sure to include these costs in your calculations of how much you can afford to pay for the car.

Shop For A Loan Before Shopping For A Car

Shopping for a loan before you begin visiting dealerships or bidding on cars online can help you save thousands of dollars on financing the vehicle you want. Banks and other lenders may have better interest rates and lower fees than the lender that the dealership will try to steer your business towards. Car dealers often advertise their financing deals in advertisements in print or on the internet, giving you plenty of information to negotiate the best deal with the lender of your choice.

Get Pre-Qualified For A Loan

Getting pre-qualified for a loan does not mean that you have the loan or even that you have been approved for the loan, but it will give you a good idea of how much financing you will be able to obtain and how much you will pay for that financing. Different lenders have different requirements for becoming pre-qualified for a loan, with some requiring documentation to become pre-qualified and others automatically pre-qualifying borrowers based on the borrower’s past history with the company. Choose the lender with the best terms and the lowest fees to get a good deal on financing for the car you want.

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