6 Tips for Financing a New Car

When you’re ready to buy new vehicles like the New 2021 Chevrolet Trucks, it can be fun to shop around for the right vehicle for your needs when you’re ready for a new set of wheels. Whether you’re looking to own a new sports car or a full-size SUV, it’s important to consider how much the vehicle will cost to own. When you’re planning on financing the new vehicle, there are a few helpful tips to follow.

1. Get Pre-approved for Your Loan

It’s important to get pre-approved for an auto loan through an online lender or a credit union. Getting pre-approved will allow you to determine how much you can afford to spend and can prevent you from falling in love with a car that is out of your price range. Getting pre-approved can make it easier to negotiate the interest rate. Boost your credit score ahead of time to get a better rate.

2. Avoid Loans with Longer Terms

Many people make the mistake of applying for an auto loan with longer terms of more than six years as a way of reducing their monthly payment. Unfortunately, you’ll end up paying more in interest because it’ll take longer to pay off the vehicle. Seven-year loans also come with higher interest rates compared to shorter loans.

3. Research Available Discounts in Advance

Research any possible discounts that are available before heading to the dealership to ensure you can take advantage of any incentives that are available. The discounts should be deducted from the negotiated price. Keep in mind that dealerships also offer many discounts to military members, students, and credit union members. You can stack multiple discounts to avoid paying full-price and get a better discount, which means you won’t have to borrow as much money to purchase the car.

4. Obtain the Pricing Information

Make it a point to request a detailed price quote from the dealership once you decide the make and model you want to purchase. It’s important to review a breakdown of all the fees to determine if there are any add-ons or upgrades you want to remove to lower the price of the car. Don’t be afraid to ask about a specific fee that you’re unsure of before you sign all the paperwork. You can expect to pay registration fees, a documentation fee, and sales tax.

5. Save for a Down Payment

If you plan to finance a new car, you’ll need to save money for a down payment, which will reduce your monthly payment. Most lenders request a down payment of 20 percent of the selling price of the vehicle. The 20 percent down payment can prevent you from owing more money than the car is worth after it loses some of its value in the first year.

6. Boost Your Credit Score

Boosting your credit score is one of the best steps to take when you prepare to finance a new vehicle. High credit scores are eligible for lower rates because they’re less of a risk for lenders. You can boost your credit score by paying down your balances and making your payments on time. You can also reduce your credit utilization. If your credit score is in the 600s, consider waiting to make the purchase before you can boost it.

Although financing a new car is a big step, you can have confidence in your decision and peace of mind once you obtain the auto loan. You can be responsible when you borrow money and enjoy owning a new car you can afford.