When shopping for a new car and the ability to get a good car loan deal to back you up, it might be tempting to get more car than you need – or want. Since many people tend to get their hearts involved in the process, they end up with a car that costs more than they can afford. Since tens of thousands of dollars are involved, why not use your brain to buy your new car and, more importantly, negotiate your new car loan?
A budget needs to be established before you go running off to the dealership, which will bring back to Earth very quickly. Once you’ve figured out how much you can afford up front, it becomes much easier to stay on track with your automotive decisions. Realistic expectations in the showroom go a long way to securing a sound car loan as well. How you want to spend your money demonstrates to a lender that you’ve thought out your investment carefully and will work with you to negotiate a car loan with a reasonable term and good interest rates.
Going into a new car loan agreement unprepared is an invitation to blowing up your budget. If you don’t know the costs of a car loan agreement in advance, you won’t know what you’ll be able to pay upfront in addition to the sticker price of the car. Taxes and licensing also add to your upfront costs and if your budget is ready to handle these, you’ll wind up paying hundreds of dollars in interest if they get swallowed up into the total loan. Lenders are obligated to tell you what the fees are before you even need to fill out the paperwork – you just need to ask.
If your heart insists on taking the wheel in your new car purchase, you can end up driving your good credit straight into a ridiculous car loan agreement. When your budgeted for a $25,000 car, don’t try to negotiate a deal on a $50,000 car. While the financing department of a dealership will be happy to negotiate a loan deal on luxury hotel room with wheels, it won’t be in your best interest to be making the monthly payments for seven years. That kind of car loan will lead you down the path of being upside-down on the car which will leave you in a deep financial hole when it comes time to sell it or trade it in.
When you’re ready to buy a new car, have a clear plan ready. Knowing what your budget, car loan costs, and taxes will be ahead of time will make the process much less painful. With so many stylish car models available to fit your budget, you won’t even need to compromise on looks, which will sooth your heart. But, a clear head is your best tool to get the right car loan.