Aug 29, 2018 / Auto & RV
Cars are an essential part of everyday life. They offer more freedom and open the world to new travel possibilities. And although the primary function of a car is to transport people from one point to another, most don’t appreciate that buying a new vehicle can also lead to a better financial future. Done right, buying a new car can help you build good credit, start and stick to a budget, and improve your future purchasing power. Here are 3 steps to financing a car with your future in mind.
As a general rule, the higher your credit score, the lower your car loan interest rate will be. And the lower your car loan interest rate, the less money you’ll have to pay in the long-run. Before shopping for interest rates on a new car loan, check your credit score to see where you stand. If your credit score isn’t as high as you hoped, make sure there aren’t any bogus entries on your report. Then do everything you can to improve your score before applying for a loan. Not only does your credit impact your interest rate, it can affect your ability to borrow money, including loan term and the amount a lender might offer.
Many new car buyers make the mistake of heading straight to the dealership when they find a car they want to buy. They kick the tires, take a test drive, and sign on the dotted line for whatever financing agreement the dealer offers, paying little attention to interest rate or the quality of service they’ll receive. The fact is that most dealerships provide their customers with financing offers that have much higher interest rates than you could get at a local bank or credit union. Plus, the type of loan servicing offered by a local credit union is usually much better than the faceless financing you get at a dealership. So, before you take a trip to the dealership, spend some time shopping for financing first.
After you’re satisfied with your choice in lender, ask for a loan quote so that you can arrange financing at the time of your new car purchase. But driving your car off the lot isn’t the end of your financing arrangement. In fact, it’s only the beginning. Make a budget to ensure that you can afford your purchase and continue making payments on time for the life of your loan. Doing so will build better credit and help you get the most out of your new car purchase.
Buying a new car means more than exchanging a few signatures for a new set of keys. Your car loan can help you build better credit, establish a lasting relationship with a local credit union, and build proper budgeting habits. So, be smart about your new car purchase. Check your credit, shop for service, stick to a budget and payment schedule, and your new car can take you to a better financial future.