With the average cost of a new car in the United States exceeding $25,000, a household's vehicle is often the second-most expensive investment they own (after their home.) Of course, in most parts of the country, a car is essential to getting back and forth to work, school and civic and church obligations. However, just because you can't do well without a car doesn't mean that you have to spend any more than necessary on financing. There are a number of easy ways to help keep this cost manageable.
1. Check your credit reports for errors. According to the Federal Trade Commission, around five percent of all credit reports contain errors that could cause consumers to pay more in interest and fees when they borrow money. You can access your reports from each of the three major reporting companies (Experian, Equifax, and TransUnion) once a year for free via annual credit report.com.
2. Shop for the interest rate, not the monthly payment. While it's tempting to simply look at how much you'd be expected to pay each month when shopping for a loan, a smarter way is to look at the interest rate and the term of the loan as well as the monthly payment. A loan with a low monthly payment could still be costing you a bundle in interest if the term of the loan is longer than usual.
3. Get auto financing pre-approved before you go car shopping. There are many advantages to getting pre-approved for your auto financing. First of all, bank and credit union financing is generally less expensive than dealer financing. In addition, when you know ahead of time how much money you have to spend, you won't be tempted to fall in love with a car you simply can't easily afford.
4. Round up your payments. Just as with your home loan, paying even a little extra each month on your car loan can yield big savings over the life of the loan. One easy way to do this is to round up your loan to closest $100 or $50 mark. This can save you several car payments over the course of a four-year car loan.
While obtaining auto financing is a fact of life for most people wanting to buy a new or late model used car, you don't have to pay top dollar. You can save by addressing any errors on your credit report, paying as much attention to the interest rate and term of the loan as to the monthly payment and by getting pre-approved by a company like US Community Credit Union for financing before you visit the car dealer.
Share13 March 2017
Are you looking to buy a new or used car? If so, will you be financing the car? Financing a car is a big decision. It comes with a responsibility to pay that loan back and following the terms of the contract that you will sign with the lender. Do you understand the terminology used in loan documents? What will happen if you cannot make a payment one month? How many payments can be missed before the car is repossessed? Do you have to maintain a certain level of insurance on the car while it is financed? You can find several tips that will help you through making the decision on which lender you will use to finance the car you want to buy.
