If you haven’t been in the position to finance a car before, it isn’t as scary as it seems. It can be a great experience and help you boost your credit score. Don’t understand financing? Basically, the bank is loaning you the money to pay for the car. In exchange, you promise to pay them a certain amount per month (or whatever the arrangement is) to be able to drive the car during that time.
Yes, technically the car isn’t yours until it is paid off. However, financing gets you what you need with payments you can afford. Plus, you can get a car you’ll enjoy. As long as you do what you need to do, you will have a great experience.
When do you plan on starting the financing?
This is an important question because it could mean the difference in hundreds of dollars over the years. Why?
A big factor in financing is your credit. If your credit isn’t good, it could mean paying more in the long run. If you wait to purchase 6 months, you could improve your credit. How?
- Make sure all your payments are current and on time. A good payment history helps your credit. Current payments combined with…
- Pay down some of all of those credit cards. Low utilization on your credit cards means a better credit score. Your utilization should be below 30%, anything above that will decrease your credit score.
- Remove anything that is negatively affecting your credit. You can work out payment plans for those so you can bring up your score.
- Even having a checking account to deposit your paycheck helps. It means your bank trusts you and you’re being responsible with your money.
Remember, you have the chance to find financing with your bank or credit union. But you can also find great financing when you contact the dealership. Sometimes, they can find you a great deal because they work with so many banks at once.
Go into this knowing your credit score and you’ll do better and be more prepared.