How to Finance Your Car Purchase in 2012
If purchasing a car is part of your big plans for 2012, you should begin the preparations as early as now. By being prepared, you can literally save hundreds of dollars from your car purchase. Consider the following tips:
Take time to explore the market. You can search online to see interest rates and loan packages by different car loan providers. You should also check the reputation of a prospective lender to avoid being ripped-off or scammed.
Check your latest credit report. Take note that your car loan rate and repayment terms will depend on a number of factors and one of these is your credit score. Errors in your credit report can pull down your rating so before submitting a car loan application, you should order a copy of your latest report to make sure that all the details are accurate.
Should you find an error, you can request the bureau that issued your report to make the necessary corrections by sending a letter via registered mail. Remember that this process can take up to 30 days so you should check your report at least a month before applying for a loan.
You can request for a free copy of your credit report at www.annualcreditreport.com. All consumers are entitled to one free report each year so you might as well take advantage of this privilege if you need a loan to finance your car purchase.
Set a realistic budget. How much do you plan to take out? What type of car do you want to buy? True, the thought of driving an expensive car can be exciting but can you afford repayment? Will you be able to keep up with your monthly car loan payments for the next two years or until the end of your loan term?
Set a budget that matches your financial situation and don’t forget to consider other expenses. For instance, you will need money to refuel and maintain the car. You must also pay your car insurance and taxes, not to mention your personal expenditures and other monthly bills.
Negotiate the price of the car, not the loan payment. Some car dealers may try to trick their customers by offering a discount or an attractive deal. However, don’t yes immediately. You might think that you’re getting a good deal when the dealer offers a lower rate but in reality, you are not getting a discount after all once you sum up your monthly loan payments within the repayment period. When negotiating, make sure that the dealer makes an adjustment on the price of the car, not on your loan package.
Choose a reasonable length of repayment. Avoid a very long repayment period even though it seems like a more convenient option. If you can complete your car loan repayment for 2 years at most, then you can save yourself a great deal of money on interest rate. On the contrary, stretching your car loan for the next five years or longer would be a waste of time and resources. Remember, the value of a car diminishes every year as it gets worn out through use.