Are you thinking of buying a used car sometime soon? What are some tips for financing one?
Car Financing Tips
First, find out your current credit score. You can get your score from Equifax, Experian and/or TransUnion. Ideally, it’s good to have a score of 700 or above. Generally, the lower your score, the higher the interest rate you’ll pay on a loan. You can improve your credit score by paying bills on time and in full.
Next, shop around to get different financing quotes from whomever is willing to give you a loan. You’ll want to find out the amount they’re willing to loan you, how long the term is, and what the interest rate would be. Ideally, try and get a shorter term loan. Yes, you’ll pay more monthly, but in the end, you’ll save money this way.
If possible, put as much money down as you can when you purchase the vehicle. Having at least 20% of the purchase price ready to pay the dealer is a good start. If there are certain fees that are added on at the time of purchase, try paying for those in cash at the time of sale rather than rolling that amount into a loan.
If you’re young and don’t have much money, but you’ve got someone in your life who does, ask them to “co-sign” for the vehicle. Their decent credit history can help make your interest rate a better deal, lowering your monthly cost.
Finally, do your best to avoid late payments. Pay bills when they’re due so you can avoid paying extra fees and penalties. By making payments on time, your credit score improves, so that’s a good bonus.