When you’re on the market for a new car, it’s easy to get caught up in getting a good price. However, don’t skip out on including the cost of auto financing in your total price. Let’s say you manage to talk your dealer down $2,000 from the sticker price by agreeing to stretch your car loan term with smaller monthly payments. However, you’ll spend $3,000 more in interest. Who wants that? In this article, we take you through how to ace your auto financing and get the best, all-encompassing deal on your vehicle.
Check Your Credit Score and Weigh Your Options
You should do this before you get to the dealership. Online platforms do this quickly and for free. If your credit score is in the high 700s, you’ll be eligible for loans with interest rates as low as 1.9 percent or 0 percent. You may still get a car loan with low credit, but you’ll have to pay tons of interest. If your score is in the lower 700s, you’re still eligible for a good interest rate, but you may not get in on any promotions. If your credit score is under 650, your best bet is to shop around till you get a good interest rate. The bottom line? Know your options before you actually walk into a dealership so that you don’t accept the first price you’re offered. If you have a poor credit history, it might even make sense for you to get financing quotes before you get to the dealership.
Don’t Settle for A Long-Term Car Loan
Whatever your credit score, a long-term car loan isn’t worth it, even if the monthly payments are low. Long-term loans are a sales tactic that makes it seem that you can afford a car when you can’t. The reality is you’ll be paying much more in interest, and the bank will charge you a higher interest rate anyway since you have a longer loan. This will impact your credit and take the fun out of your new car. Once you bite the bullet and secure the shortest-term loan you can afford, set up automatic payments so that you don’t miss any payments on your loan.
