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Last Updated on December 8, 2023
You’re on the market for a new car. You’ve even done some thinking about the type of car you want to get. If you know anything about buying cars, however, you know that it’s not cheap. Unless you have the funds upfront to pay for the car in full, you’ll need financial assistance. This requires you to have your finances in order. So, before heading down to the dealership to look at rides, make sure you’ve completed the following.
Save Some Money
Dealerships make offers all the time with an option to pay zero dollars down and drive off the lot in a new car the same day. This may sound enticing, but, when you don’t put down anything towards the overall costs of purchasing your vehicle, you end up needing a larger loan and pay more in interest rates and associated fees. Not to mention, even if you do capitalize on one of these offers, you’re still responsible for costs like motor vehicle fees and sales tax. So, it is best to have some money saved up before trying to buy a car. However, if your car is damaged, you can trade it in for a new one.
Get Rid of Existing Debts
When you finance a car, you’ll be responsible to pay a monthly car note for the duration of the loan along with other associated costs of owning a car. As such, you want to try and eliminate or greatly reduce your existing debts. This frees up the cash you have to contribute to your new car. Contact creditors and arrange affordable monthly payments or negotiate a settlement. You should also cut unnecessary spending like eating out or buying coffee.
Clean Up Your Credit History
One of the biggest qualifiers for an auto loan is good credit history. If you don’t have any credit or have bad credit, this can limit your financing options while also making it more expensive to own a car. Before heading to a car dealership, pull all three credit reports to see what needs to be done to improve it. This may include paying down debts, settling collection accounts, or disputing inaccuracies. For those with no credit, you may need to open a credit account and maintain the account in positive standing for a few months.
Determine What You Can Afford
You may have your eye on a particular car, but the bigger question is, can you afford it? There are a lot more costs involved with purchasing and owning a car than you may realize. For starters, you’ll have to pay the down payment, motor vehicle fees, monthly car note, and interest rates. However, you’ll also have other costs. You’ll need to find affordable liability or full insurance coverage. Why is cheap liability insurance important? Well, not only is it required by law, but at the very least it provides financial protection in the event that you are involved in an auto accident. In some instances, however, your lienholder may require you to obtain comprehension and collision insurance as well to protect their asset. Other than car insurance, you’ll also be responsible for associated costs like gas, maintenance, and repairs.
You’ll have to pay more attention to your costs if you’re in the process of reinstating your license. Drivers will need to have an SR-22 (also known as a certificate of insurance) to prove they meet the minimum liability coverage in their state. While an SR-22 isn’t technically a form of insurance, you can still find the best SR-22 deal online and save money. And you’ll need it, too, as SR-22 certificate holders have to pay higher insurance rates for an average of 3 years.
Review your personal budget to determine how much you have available to contribute to these expenses. It makes no sense to purchase a car that will bankrupt you or cause complications with other bills and financial obligations.
Review Finance Options
Though dealerships have their own network of lenders they can turn to when trying to get you approved for an auto loan, the offers aren’t always the best. For this reason, you want to review auto financing options on your own to determine if you can get a more affordable rate to lower your overall costs. You can complete applications online in minutes to get pre-approved for a deal and then compare your offer to those the dealership provides to make the best decision.
Buying a car is expensive. While you may be excited to head to the dealership and check out some of the best new and used cars to purchase, you want to go prepared. You can do so by getting your finances in order. Simply complete all of the steps listed above and then visit the dealership that provides you with the best selection of cars.