Applying for a car loan is fast, simple and painless but like many things, it’s as much about the preparation as it is the application. That’s what we’re going to cover today.
Five do’s and don’ts for when you’re getting ready to apply for a car loan.
1. Do set a budget
It is disturbingly easy to overspend when buying a new car. All those shiny extras and technology options soon mount up. Setting a budget is the only way to avoid this.
Set a budget as soon as you’re thinking seriously about buying a new car. Assess your down payment and look at how much you can comfortably afford to borrow. Use that to set a budget and stick to it.
2. Don’t blow all your savings on a down payment
Down payments can save you a lot in interest but you have to be measured in your approach. If you have money set aside for a down payment, great. If you don’t, make sure to allocated a set amount of savings for a down payment and only use that.
Don’t empty your rainy day fund just for a car. Murphy’s Law says the minute you do that, something will go wrong and you will need money for something important. Make sure to keep enough set aside to see you through.
3. Do create a want and need list
The want and need list forms part of budgeting for your new car. Make a list with a need column and a want column. Add all the features your new car must have in the needs and all the things you would like it to have in the wants.
Use the list to help you decide on a make, model and trim level for your new car.
4. Don’t let having bad credit put you off applying for a car loan
People find themselves with a low credit score for all kinds of reasons. Not all of them are your fault. We get that, which is why we love working with people rebuilding their credit.
We have access to a range of high quality lenders who assess people on their current situation and not just their credit history.
5. Do consider the running costs as well as the price
Car loans are all about affordability. Part of that is being able to comfortably afford loan payments alongside your other monthly expenses. People often forget vehicle running costs when budgeting.
Add the cost of gas, tires, servicing, insurance, any parking permits and other related expenses when looking at car loan. It will save a lot of hassle if you do it now rather than later!