Cars are the second biggest purchase we ever make after our homes. Unlike real estate, we often buy replacement vehicles every few years, so any tip you learn to save money on the purchase can be used again and again. Here are a few tips on how to save money on your next car purchase.
Clean Up Your Credit
The interest rate on your next car loan depends in part on your credit. Now is the time to be cleaning up your credit. For example, if you’ve paid off credit accounts, pull your credit report and ensure that they show zero balance. If you asked to close an account, verify that they actually closed the account. Being hit with an annual fee you didn’t know you’d though you wouldn’t owe hurts you. When they report the annual fee as a late payment, it is hurting your credit score. Ensure that there are not duplicate entries on your credit report, such as you cosigned listed as both your debt and a jointly held debt. Don’t let your credit take a hit in the run up to your next car purchase. Don’t go buy new furniture on an installment loan. Make all of your payments on time, including your current car payment and your rent. Don’t open up a new credit card to roll over an existing loan balance, and if you do, make sure you close the old credit account so that your debt to income ratio isn’t insanely high.
Work with Lenders Who Understand Your Situation
Sometimes cleaning up your credit isn’t enough. Perhaps you have bad credit due to a job loss, a divorce or financial mistakes. While cleaning up your credit could raise your score a little, it won’t be enough to give you good credit. Unfortunately, many lenders will charge you a fortune in fees on top of high interest rates if they’re willing to do business with you at all. The best option is to shop around for lenders who won’t punish you for your bad credit. Click here for a Brampton car loan available to you regardless of your credit situation.
Do Your Research
Have a general idea of the type of car you want to get and the price range you’d pay given the age of the vehicle. This allows you to know if a vendor is selling a used car at the new car rate. Understand the way the vehicle depreciates based on age and mileage. Don’t pay the new car rate for a one to two year old trade-in. Do not overpay for a car that has nearly had the wheels driven off of it. Research various auto lenders, too. Who hits customers with every fee they can get away with? Take the time to look into various car lots, too. Which ones have a reputation for duplicate billing or pushing customers to buy extras that add several hundred dollars a month to the car loan?
Know What to Skip and What to Get
Save money by skipping the extended warranty plan. They charge more for the warranty than you would for the repairs, and they earn even more money by charging a premium for their labor. Skip the after-market accessories like seat covers, an after-market alarm system, a better sound system and stripes. You really can’t afford these items right now, and the dealer will charge you more than you’d pay if you bought it yourself from an electronics store. Don’t pay for car detailing, a car wash or vehicle prep. The car should already be in saleable condition. After all, they’re selling it.
Take the time to do your research and avoid being scammed so you can save money on your next car purchase. Clean up your credit and work with creditors who won’t penalize you for your bad credit if it isn’t perfect.