Financing a car in your near future? Well, we all finance a car at some point in our lives, but there are some things that you should know before you sign the loan papers. You will want to make sure that you understand the agreement before you decide to push the loan through. First, you should think about credit for a minute.
Do you have good credit? You may have to take out a loan with a large interest rate to get a loan because you are a risk if you have bad credit. Don’t know what bad credit is, well it is a credit rating of 620 or less. You may be able to get a good loan if your rating is low based on the fact that you have less credit than most people. Having bad credit is a lot worse than having no credit, but you still are a risk and the rates may be higher. You should look around when it comes to financing a car; there are many ways of doing so.
First, you may want to shop online for your financial company. A good creditor will be more than willing to help you out. You should know the rates of the loan before you apply. The thing is, the more you have to apply, the more you get rejected and the worse your credit looks. Most people don’t know that, but if you get rejected for loan, it goes on your credit report. Of course, after a while, it will disappear, but still.
Secondly, you should know a lot about yourself before applying. You need to be at least 18, or have a co-signer, but most people under the age of 25 need a co-signer. You also need to earn a good amount of money and have very little bills if you are younger. If you are older, they like to ask about your disposable income, income after taxes. You need to have a solid employment history and you have to have a stable home.
They want to know that you’ll have the money to pay them back and also that they can come find you at any time. Getting a loan through a creditor is just one step up from a loan shark. Creditors may not come to your home to bothering you, the other difference is that Creditors will take you to court for the money rather than beat the money out of you.
In addition, it is better to get approved before you go to the car dealer. You can always get a voucher, but if you do this, you won’t end up disappointed. You will know exactly the amount that you can borrow and you can look for a car in your exact price range. The only thing is that you have to include the fees and taxes so you will need to go below the loan amount. You may not have to place a down payment, but it does look better. You should put at least 500 dollars or even 1,000 dollars down. If you are willing to invest your own money in the car, the bank or creditor will be more than happy to fork out the other money.
If you are smart, you will find out how to finance a car that you really want and take the time to understand the shopping process. It is more than picking out a car, signing some papers, and paying a loan. You don’t want to end up having questions after the fact. Once you sign the papers, there is no room for questions and you need to learn what it takes to finance a used car. When you finance something, you are making a decision that fits your lifestyle, as well as control your life and finances.
There are three things when it comes to purchasing a used car that you absolutely have to get in writing:
First, what is your monthly payment? You need to know what your monthly payment will be before you sign the papers. If there is nothing written in the papers that states your payment plan (the number of payments and the amount each payment), then you should never sign the paperwork because they can basically charge you anything they want then.
The second thing is the down payment. Now sometimes you do not need a down payment. You can purchase a car with nothing down and finance it at a good rate. Today, people are getting away from the down payment because people are placing the down payment and then struggling to make their first few payments.
The third thing that you need in writing is the price of the car and it has to show where the fees are added. You should make sure that you have an equation. You should see the price and then all the individual fees and taxes that you have to pay. Don’t just settle for one number. Know exactly what you are paying for.
Before you even consider a used car, you need to figure out exactly what you can pay monthly and what you can put as a down payment. If possible, try to get the loan without the down payment. If you do not have to make a down payment, you are more likely to be able to afford your first year of payments with no struggle. Then if you do make a down payment go with ten percent. However, try to keep it under 1,000 dollars if you can.
Try to finance through a bank or credit union that knows you, so that you can get a lower interest rate based on the fact that they know you. This is especially important when you live in a small town. If you do not have a local bank or credit union, you should finance through the dealer. Doing so can help you because the dealer deals with a lot of people and has a lot of pull with their creditors. If they like you, they will push your car loan through.