There are certain purchases that we all make that will affect us for years to come. Buying a car is one of those major expenses that we have to plan for on a monthly basis. Between the principle, interest, insurance and skyrocketing gas prices, cars are getting more expensive than ever. So before you leap into such a purchase, there are some basics that you need to know. Here are the absolute most important and practical tips to follow.
5. Improve Your Credit Beforehand
Before you even think about buying a car, do as much as you can to improve your credit. Take care of any delinquent accounts, make sure that all of your payments are on time and knock down the balances to as close as $0 as possible. Doing these things can improve your credit instantly so it’s not like you have to wait several years to improve your score. The higher your credit score, the better your interest rates will be.
4. No One Stop Shopping
One mistake that a lot of people make when buying a car is going straight to the nearest dealership and not considering a different car at any other location. The wisest thing you can do is to shop around and bring up the price that you were offered at that other dealer. Dealers will almost always try to go lower than their competition, so make them bid for your business rather than the other way around. Overall, this can save you hundreds if not thousands on the final price.
3. Shorter Terms are Better
While you’ll have to pay more per month toward the full purchase of your new car, getting a shorter term means that you’re paying much less overall. Shorter terms lead to a much lower total balance of interest. Sure, it would be nice to lower your down payments to something more affordable, but if you have the means, it makes much more sense to avoid higher interest.
2. Work on Your Down Payment
If you have cash on hand that you can spend toward your car purchase, use it. Just like it is with any loan, getting the financed amount lowered is going to help you in the long run. A lower balance, of course, means a lower amount of interest. Because used cars are more valuable now than ever, you can also use your current car as a form of down payment. Adding any extra cash you have on the down payment is a big added bonus.
1. Bide Your Time
It’s crucial that you pick the right time to buy a new or used car so that you’re getting the best deal. The best time to buy a car is toward the end of the year. It’s at that time that dealers are trying to offload the previous year’s inventory while also trying to hit their yearly quotas. Sticker prices will be much lower than they are in the beginning of the year. You should also keep an eye on interest rates. If lower rates line up with the end of the year, then that’s the time to pull the trigger.