Check Credit Score / Credit Score Information / Credit Articles / Large Purchases / Buying A New Car
Buying A New Car Advice
Posted: October, 2014 by Check Credit Score Staff
Buying a new car is often one of the first major purchases that a young person will make. And as people grow older they will want that brand new expensive toy that they have always dreamed of. Both purchases are often a large purchase which is a stretch for the buyer's budget at that time.
In this day and time people rely heavily on a car or truck to get to work, to school, to get groceries and for most everything that goes on in their lives. But, this doesn't mean that you have to have the most expensive vehicle on the road if you really can't afford it.
What does really afford it mean? Yes, you say I can make those monthly payments. But, what if you lose your job or some emergency happens that takes more money than you expected.
First off, just late payments on your vehicle will be a negative against your credit scores. Be aware that if you decide to just let your car go back to the dealership because you can't pay for it this is still considered a repossession and will appear as such on your credit report. You will be responsible for the difference in the amount you still owe on the car less the amount that they re-sell the car for. For instance if you owe $9,500 on the vehicle and they sell it for $6,000 then your credit report will show a repossession with a balance due of $3,500.
Hopefully you can now see the importance of getting the best deal you can on your new car and purchasing one whose price is well within your means.
So, before you even set foot on a dealership showroom floor you need to do your homework. First, decide how much you can really afford to pay for a car and set your mind to not go over that amount no matter how persuasive the car salesman is. After all, he is not going to be around and make payments for you when you have gotten in over your head. He likely won't even still be working at the dealership.
If you have a trade-in, get online and check some sites to see what your car is worth. You may not get quite what they say, but you don't won't the dealership low balling you with your trade-in value.
Once you have decided on a new car and you know the amount then check for financing with a couple of the banks. Dealership financing is usually a higher interest rate than you can get at one of your local banks. Just be sure and compare before you sign on the dotted line.
When getting the total price of the car be sure they have added in all the extras and the price you are attempting to finance is really the amount you are going to owe.
If you are considering a introductory zero interest rate offer then make sure you know exactly what the interest rate is going to be for the whole term of the loan.
Like we said at the beginning be sure that you feel comfortable that you will be able to make the payments on the car for the life of the loan. If you are financing for six years do you feel fairly certain that your job will last six years. You need to make sure that you have enough in savings to make at least three to six car payments just in case you lose your job and are out of work for a period while you look for new work.