The car-buying search is an exciting time. While for many people a vehicle is just another way to get from point A to point B, for others a vehicle gives identity. Not to mention, you want to feel comfortable and safe while you’re driving to work, the grocery store, and anywhere else you need to be.
With that said, the reality is that most people can’t afford to pay cash for a vehicle. Luckily, car loans exist. Here are three things to know about car loans before applying.
What Your Possible Car Loan States
While car loans are typically the same in the sense that an interest rate is attached and you have a monthly payment, what your possible car loan actually states is the most important part. A higher credit score typically means a lower interest rate which means less money you’ll have to pay back. It could also mean a lower monthly payment. However, if this comes at the cost of a longer repayment period, then that could lead to you actually paying more money over the course of the loan period, despite monthly payments possibly being lower.
An annual percentage rate (APR) of 0 percent might sound appealing (and in many ways it is), but it could also increase your monthly payments because the loan is for a shorter amount of time. With that said, a higher downpayment typically results in lower monthly payments.
There are many factors to consider with a car loan and everyone’s circumstances are different. The key is figuring out what you can afford to do and what your future car loan actually says. There are also different types of car loans. For example, company car loans are ideal for people who need a vehicle for their business. Depending on what you’re looking for in a loan and what you’re going to be using your vehicle for, a car loan for your business might be the ideal option.
Research the Company You’re Considering Buying From
Driving off the car lot with your ideal car and loan is essential. However, those aren’t the only aspects to consider. As an example, if you purchase a used car from a company with red flags, then you might not get the best service if you need something fixed, especially if your warranty is tied to this dealership. This is a huge problem if your car has routine issues.
We encourage car buyers to use GoLookUp to research the company they’re considering buying a car from. The website can provide car buyers with all sorts of information about a person or business. If blunders and glaring issues arise, then you might consider purchasing your car from another dealer.
Figure Out Costs and Your Finances Before Saying Yes
This might sound obvious, but people tend to be in a different state of mind when it comes to making a big decision, such as buying a car. Impulsive spending happens far too often during the car-buying search for many different reasons, from a pushy salesperson to buying the first car you see to not believe you’ll get a better deal to the excitement surrounding a new car.
Don’t let a dealership or salesperson persuade you into a car loan you can’t afford. It might appear that they want what’s best for you, but they probably only care about making the sale. Go into the car-buying process knowing how much you want to spend on a car and stick to your budget. You might feel like you can make it work because you have a new car on your mind, but the last thing anyone needs is to be stuck in a long-term loan they can’t afford.
Before purchasing a car and finalizing the loan papers, crunch all the numbers, from the down payment to the monthly payments to the overall cost of the car after interest rate and life of the loan. There’s typically more to a car than the price tag on the windows. Luckily, you can always find a different vehicle, lender, and dealership if the numbers don’t add up, you always have options—until you sign on the dotted line.
To read more on topics like this, check out the finance category.