If you want to buy a new car and do not have the funds available for your purchase, car financing is the simplest way to acquire the vehicle. But before you finance a car, here are five things you should do:
Check your credit score
Obtain a copy of your credit report to avoid unpleasant surprises when you go loan shopping since your credit score will determine the type of auto loan you can access. If your credit score is less than ideal, knowing what’s on the report will allow you to take steps to improve it. If there are inaccuracies in your credit report, contact the relevant creditors to have the issues corrected. (Read “Tips for Getting a Car Loan with Bad Credit“)
Determine the amount you will need to borrow
Before applying for a car loan, you must determine what car you can afford. It is wise to measure the affordability of your purchase by using a payment calculator. A payment calculator will allow you to estimate your loan payments to see how they will impact your monthly budget.
Decide on the length of the loan
Typically, auto loan terms last for five or six years. While longer loan tenures are available, extended loan terms come with higher interest rates, which means you will pay more in the long run. On the other hand, although shorter loan terms have lower interest rates, they come with higher monthly payments. The duration of your loan should be determined by how much you can comfortably afford to pay each month. (Read “6 Factors That Affect Your Car Loan Interest Rate“)
Prepare a budget
Outside of the listed price, there are other costs to consider when buying a car. These costs include sales tax, dealerships fees and financing fees. It is always a better option to use cash to cover these added charges instead of including them in your loan. After you have acquired the vehicle, you will also have additional monthly expenses such as insurance, fuel costs, maintenance and other operating expenses. All these things will ultimately affect the affordability of a vehicle and must be contemplated before you make a purchase. (Read “Auto Financing Tips for Saving on Your Car Loan“)
Compare your options
Do not sign any agreement until you have looked at all your options. You should contact several dealers and lending institutions to find the option best suited to your budget. To effectively compare your financing options, you must know the full cost of each auto loan. Also, ask if there will be any early repayment penalties in case you want to increase your monthly payments should you start earning more money.
Select the best lender
Once you have compared all your options, you should select the car financing option that works best for you. Even after you’ve chosen a lending institution, you must be careful to check the fine print of your loan agreement. Ensure everything listed in the contract is the same as what you have discussed and agreed on with the lender. If everything is in order, sign the contract to get the money you need to purchase your new car.
Do you need to finance a car in Vancouver?
If you are looking to finance a car in Vancouver, contact us at Instant Auto Loans. At Instant Auto Loans, we offer instant car loans based on the equity in your vehicle. Our car loans are short term, easy to qualify for and straight-forward to repay. We offer our clients courteous and confidential service and have been a trusted lending institution since 1986.
So, what are you waiting for? Give us a call today to learn how you can have your auto loan processed in as little as 15 minutes.