Buying a car is a major purchase, and it is a job that should be done with great care and a lot of thought and research. Before you sit down at a dealership and sign your name on the dotted line, there are certain questions that you want to carefully consider before agreeing to drive the car off of the lot.
By having your mind set on what you need to know before you ever set foot on the car lot, you may be able to negotiate the interest rate on your car loan.
Should I get Pre-Approved?
Getting pre-approved for a car might be a good idea, especially if you have already decided on where you want to secure financing. Another advantage to having a preapproval secured before you start shopping is firmly understanding how much money you should be spending on a car. This will prevent you from shopping well above your price range.
However, getting preapproved is not exactly necessary when shopping for a new car. This is especially true if you are planning to shop around for financing.
What is the Purchase Price?
The price that the dealership puts on the window of the vehicle is not the actual price that you are going to pay for the car. When you buy a car you must also pay for tax, title, and then any warranties or extra insurance (such as GAP insurance) that you want to add to the purchase of the vehicle. These things are important for someone who is purchasing a car to consider. Be sure to ask your salesman what this will add to the sticker price.
What is the Interest I will Pay?
Before you sign on the dotted line, make sure you ask what interest rate the financing company is offering for you. Be sure to make sure that your interest rate is appropriate for your credit score and the length of the loan. The higher the credit score, the lower your interest rate should be.
How Much Should I Put Down?
This is entirely up to you. Most finance companies will only finance a certain percentage of a vehicle’s value. This usually means that the finance company expects you to pay at least that difference at a minimum. However, there are ways to get around having to make a down payment. If you are trading in a vehicle, for example, you can often use that vehicle as your down payment.
How Long is the Loan Term?
The loan term will be determined by the financial institution funding your vehicle loan. This will affect not only how long it will take you to pay off the loan, but also how large your monthly payments are. However, this is an important question to answer before signing on the dot.
Before you enter into a financial agreement, you should always be sure that you understand all of the facts you are agreeing to. Asking these simple questions will help you have a clear understanding of the expectations on your part of the financial agreement.