Next to buying a home, purchasing a new automobile will be the largest purchase you will probably make. Even if you have poor credit there are a few easy rules that can save you a lot of money when purchasing a new automobile. A lot of people are stuck in old ways of getting car financing and they don’t realize that it can literally be costing them hundreds or thousands of dollars.
We have all heard the horror stories of people that bought more car than they could afford or the ones that overpaid because they were pressured into making a decision on the spot. Take some time to go over all your bills and calculate how much money you have left each month. Set your reasonable allotment for a car payment and don’t budge from what you know you can afford to pay. Just relax and don’t let the whole process stress you out. This should be a fun time, you are getting a new set of wheels after all!
First and foremost be aware of your credit score. This will determine a few things like; your down payment, your interest rate and how much car you can purchase. If your credit score is above the 650 mark and you have the budget and income to support a car payment then you are a serious buyer in a lenders eyes. Abandon the old school car shopping method of showing up to the dealer. Take some time and apply online for your auto loan. You can get access to lenders not available to your local dealer and might be surprised how good of a deal you can get. This literally puts you in the driver’s seat before you even get to the dealership. You now know how much money you have available and all you have to do is find the vehicle you want within your budget.
What if You Have Bad Credit
If your credit has suffered a few bumps and bruises and you are below the 650 mark don’t sweat it too much. Sure it sucks but there are lenders that can help you. When looking for online car loans for people with bad credit you will need to work with a lender that actually has a finance program available for you. These special auto lender programs will give you a 2nd chance when 90% of the traditional lenders will turn you down. Of course you will pay a little higher interest rate and may not be able to get your dream car but you should be able to get a new car with a warranty. This will also give you a chance to prove your credit worthiness to the lender. After making your payments on time you will probably be able to trade up to a nicer automobile as well as seeing your interest rate be lower on the next loan.
Additional Things to Consider
Remember to consider these things when buying a new automobile.
* How much are your payments going to be
* Is it going to use more fuel?
* Are you getting GAP insurance in case your car gets totalled in an accident
* Call your insurance company so you will know what full coverage insurance will cost including GAP if you want it.
Once you have set a realistic budget and know how much shopping money you have from the lender, it’s time to go car shopping. Well, not literally but lets do some shopping online first. Most people kinda have an idea what type or make of vehicle they would like and you probably do to. Go online or use an app like TrueCar to get a good idea what the car prices for your preferred vehicle is in. Once you have this in mind, now look at a few local dealers websites and see what kind of prices they are offering. Are there any current incentives (military, student, etc) that you may qualify for? Last but not least, look in unexpected places for the best deal. What do I mean? Costco of course!
The last vehicle I bought through Costco was almost $2k dollars below what TrueCar was showing. Remember, TrueCar Can’t Serve Two Masters! It is a good guideline because you will get a ballpark price. If you are not a member of Costco it might be worth considering it.
When you are first approached by your car salesman let him or her know that you already have financing in place and need to look at vehicles (type you like) in $X price range. This will save you both a lot of frustration and make the whole process go much smoother.
Once you have found the vehicle you want within your price range you are past the halfway mark. Now it is time to go inside and look at the numbers the dealer is going to offer you. Of course they are going to start high so remember this and fall back on your online knowledge you already have. Know the price point that you are comfortable with and stick to it! If the dealer wants to play games don’t be afraid to gather your items and head for the door. If your price request is reasonable, 9 out of 10 times they are not going to let you leave. They want to sale that car!
Being a saavy and price concious consumer can literally save you hundreds or thousands of dollars. All the tools you need are at your finger tips!
A special thanks to ARCCT Loans group for taking time to explain their subprime finance program to us and be sure to use them if you need some extra help on the credit side of things. They have lenders nationwide and can really help people with good and bad credit.