Sticking to a budget on a car loan | Car Loan Tips

Car Loan Tips

It can be tempting to spend more money than you intended to get the car you want, but securing a loan before going to the dealership can help you save a lot of money and stress. Here are some Car Loan Tips that help with managing the cost of a new car, no matter where you go.

Get the loan first

Before even setting foot on a car lot, talk to a bank or financing company to secure a car loan. A lot of car salespeople will push for financing through their company, but these terms can carry fees, higher rates, and longer terms than what could be secured elsewhere. These individuals will also want you to take an auto loan for a higher figure than you may have intended.

What’s more, you should be aware that special financing deals are not always as they seem. While it may sound appealing to get cashback on a car purchase, it may not play out well for the lifetime of the loan. Ask the loan officer to show how it will work out in the long run so you can see if it will be beneficial before you agree to the term.

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Listen to your gut

If you did the math, checked your finances, and know you can only afford a certain amount per month, do not spend more than that. A dealer will be persuasive, telling you what you want to hear and encouraging you to get a nicer or less practical car with a higher price tag. If you secure a loan ahead of time, you will already have a fixed amount to spend, making it difficult to exceed your budget.

Also, if a vehicle looks too good to be true, that may very well be the case. Just because the car is coming from a dealership does not mean you won’t encounter lemons from time to time. You should always thoroughly research the vehicle, get it checked by a third-party mechanic and do a title search before committing to the purchase to ensure you’re getting a reliable ride.

Car Loan Tips – Don’t miss payments

If you are forgetful when it comes to paying bills, you might want to consider setting up an automatic payment system that can deduct the amount due every month. This ensures payment is made on time every month without fail, which provides more peace of mind and more reliability.

Sometimes this is offered by the lending company, but if not, your bank may include an automatic payment service with your checking account.

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