Other than buying a home or paying for a college education, getting a car is probably the biggest purchase you’ll ever make in your life. Unless you’re fortunate enough to have a big nest egg saved up or if you have an impressive cash flow coming through each month, you’ll need auto loans to help pay for your new vehicle. You don’t want to get in over your head or get to the dealer only to find out you can’t qualify for financing. Fortunately, there are some things you can do ahead of time to help ensure you get the financial assistance you need.
Pay Down Your Debt
Your debt-to-income ratio will go a long way in determining whether you qualify for a favorable loan. If you’re struggling with credit card debt, start working today to whittle it down. Pay off your installment loans and begin to chip away at those items bringing down your debt-to-income ratio. The less debt you have and more income you bring in, the better chances you have of getting a loan for the car you want.
Know Your Score
If you don’t know your credit score, it’s a good idea to find out what it is before shopping at the dealer. This way, there won’t be any surprises. Make sure you pay your bills on time or that you don’t open any credit accounts or get other loans right before you start shopping for a new vehicle. The better score you have, the better interest rate you’ll secure when you start looking for auto loans.
Have Something to put Down
If you know you’ll need a new car in the coming months, start saving money now. This will give you something to use for a down payment when you’re ready to purchase your car. The more you can put down, the less you’ll pay each month.
Getting a car loan doesn’t have to stress you out. Keep these tips in mind, and you can make this a smooth, enjoyable process.