Everyone has an idea of what will define them as “making it” as an adult. For most, having the car they have always dreamed of — and being able to purchase it all on their own — is the status symbol that says, “I accomplished something.” If you are in the market for a new or used car that you have always dreamed of, you need to know getting a loan isn’t always as simple as you may think.
For those with less-than-stellar credit or no credit at all, being able to finance the car you want might seem like nothing more than a pipe dream. The good news is that if you follow the right steps, your pipe dream can become a real one. These five tricks to obtaining your first car loan are the ticket to getting you behind the wheel of the car you have wanted.
Figure out what your credit score is
Not many young professionals give much thought to their credit score. Often, they assume that if they don’t have any debt and have always paid for things in cash, they are as good as gold. That is a huge mistake. How lending agencies or traditional banks decide if they want to loan money to people is by assessing the risk that they have in lending an individual money.
Even if you don’t carry any debt, if you have no credit history at all then there is no record about whether you have the capacity or the character to pay back what you owe. Don’t assume you have an excellent credit rating just because you haven’t ever borrowed money and you owe no one. In fact, not having any credit history at all is the worst-case scenario. You have to borrow money to borrow money, which is the worst catch-22 that any young adult has to come to terms with.
If you do have a less-than-perfect credit rating, then you have to build it by borrowing money and establishing a pattern of repaying it on time and in full. Likewise, if you have any debts that you haven’t paid on time or any late payments, it is a good idea to look at your credit report and dispute any inaccuracies. Your credit rating is going to be the key to borrowing the money you need to drive away in the car that you desire.
Devise a budget
Often people pick the car that they want first, and then they work to try to afford it by changing their loan repayment term or trying other tactics to fit it into their budget. The key is to know what you can spend before you go to the dealership and to not make an impulse buy that puts you over your budget. Don’t make your loan fit into your budget; buy an automobile that has the total cost to fit your budget instead of stretching out your payments and ending up paying more in the end for a car that is worth less.
Before you hit the dealership, make sure to see if you can get a traditional loan outside of dealership financing. Dealerships have a lot of resources to get you a loan, but sometimes traditional lending institutions can at least let you know what your credit score is and how much you can be approved for ahead of time. That will steer you to be realistic about your price range and give you a good estimate of what interest rate you are eligible for. To make sure not only that you get the car you want, but that you can get it at the best price possible, know what you can borrow and how much you will likely be charged in interest.
Buying a car is a big decision for most people. Before you hit the car dealerships Surrey, make sure you have a realistic budget and that you stick to it. Also, check out your credit score and determine if it would behoove you to spend a couple of months trying to raise it or raise a down payment to pay less over the life of your loan. If you keep a straight head and make a decision based on smart financials instead of emotional impulse, you can still have an awesome car and you won’t be putting yourself in over your head.