Do This Before Purchasing Your Next Car
Are you ready to roll? As you are looking to buy your first or next car, you are likely researching things such as which model you want or what color you want, and even small things like what type of seats you prefer. After all, a car is something we spend a lot of time in, so we want it to fit into our life, right? Before you make your final purchase and apply for an auto loan, here's some tips to help ensure you make a smart auto purchase.
Know Your Budget
Let’s be honest, we all wish we could buy the brand newest Aston Martin or Lamborghini. I mean, can you imagine being able to afford one of these???
However, we digress as we have to remind ourselves what our budget truly allows us to buy. *sigh*
Before you start auto shopping, it's important to break down your expenses to see how much you can afford for a monthly note, determine how long your term will be, and how much you will pay in interest. If you start shopping before knowing how much you can spend, it can become very easy to convince yourself that you can afford more than you really can. Therefore, it’s best to know ahead of time how much you can afford and to stick to it. Doing this will benefit you greatly in the long run because it keeps you from getting into more debt than you anticipated. If you're looking for a good place to start looking for cars within your budget, check out the AutoSMART program for great options.
Calculate Your Monthly Payment
Now that you determined your budget, you can use this Car Loan Calculator to plug in your maximum purchase price, your term in months, and the interest rate you will be receiving. If you aren’t sure about the interest rate yet, you can estimate different interest rates to see how that will affect your monthly payments
Keep Your Credit in Check
Once you have determined your budget and calculated the monthly payments, you are ready to consider an auto loan. When applying for an auto loan, your credit will be evaluated. Evaluation of your credit includes things such as payment history and how much you have already borrowed for other loans. Learn more about credit scores here. Why is it important to know your credit? Lenders use your credit score to determine how likely you are to pay back your auto loan. The higher your credit score, the more likely you are to repay the loan. Your credit score also helps determine the interest rate that lenders will offer you on a loan.
You might be thinking “How can I get a car loan if I have bad credit?”. A good start is through the Education First SmartScore program - which allows you to set up a free visit to review your credit and discuss ways to improve it! Learn more here.
Remember That Your Future Self Will Thank You!
As you prepare to make your auto purchase, follow these steps to ensure you make a smarter auto purchase. One day, these small financial steps might pay off so well that you find yourself purchasing one of these 9 most expensive cars. Hey, we can dream, right?