Check Your Credit
Before you apply for a loan, it’s important that you check your credit score. Ensure that there are no mistakes in it. If you don’t have a credit score or if your score is below 670, consider applying for a loan with a cosigner.
Study Your Budget
See how much money you have left after covering your essentials like bills and food every month. This should help you understand how much you pay every month for your car. Also leave some room for emergencies and miscellaneous purchases. No matter what, don’t spend more than 10% of your take-home pay on your car payment.
Compare Cars
Figure out what car fits in your budget and which cars you like. Research and narrow down models and dealerships you’d like to consider. Check how much different sellers are asking for the same type of car.
Save For A Down Payment
Offer at least 20% of the price as a down payment. The larger your down payment, the smaller your loan, and the easier it will be to repay. Plus you’re also likely to get better terms and save on interest.
Compare Lenders
Look for lenders that will finance the type of car you want and those that you and your cosigner can qualify with. Then compare their rates, terms, and loan amounts to find the best deal. Try prequalifying for a loan if possible.
Get Pre-Approved
If possible, get pre-approved for a loan because that way, you will know exactly what terms and rates you will be offered. But that offer is for a limited time only and will affect your credit score. So use it to buy a car or negotiate for a better offer with the dealership.
Do The Paperwork
Okay, so now you have the right loan and have found the right car. Go through the loan paperwork with a magnifying glass or better yet, get someone with experience to study it. Ensure that there are no add-ons, no prepayment penalty, no hidden fees or scams. Only drive the car out of the lot after the financing has been finalized. Be patient, and you will be rewarded with a sweet, new ride.
