You just wish you can drive to an easier route home while you brave another grueling Portland traffic in that bus. The thought of owning a car and the freedom to drive to anywhere you want intensifies your desire to buy a car ASAP. But before you get too excited, there are a few things you need to consider first. Just like with any major investments, there’s some prep work you need to accomplish before taking out an auto loan. Here’s what you need to do:
1) Determine your budget.
The first thing you need to find out when planning on buying a car is how much car you can afford. Finance advisers say that the ideal amount you can pay for a car every month is your net income minus your expenses. But it’s not really that simple. A few things you have to factor in for your car budget includes, but not limited to, the auto loan payment with interest, car insurance cost, maintenance and repair expenses, gas allowance, and parking fees.
2) Check your credit status.
Pull out a copy of your credit report and see how you are doing in managing your credit. Does your credit history look good? Do you have any record of bankruptcy, missed payments, repossession or foreclosure that can make your credit profile look bad? To find out, go to AnnualCreditReport.com and send a request for a free copy of your credit report. Remember that you are entitled for one every 12 months.
However, you won’t see your credit score there. Although there are numerous online sources offering free credit scores, finance advisers suggest handing out some cash for your score as paid scores can give you a more accurate idea of how much auto loan interest rate you will most likely get.
3) Do enough research.
A lot of car buyers do not like the idea of car research because it consumes time and effort. But if this is the most effective way to find the most appropriate car and best car deal for you, research will certainly be worth the time and effort. Before you decide on which car to buy, read a lot of reviews of various car models, compare car prices and auto loan quotes, and read a lot about the car-buying process and the auto loan approval process, especially if it is your first time to buy a car. Spending adequate time for research surely pays off.
4) Find prospective lenders in your area.
Do you already have any idea on where to go first for an auto loan? Portland has numerous auto lenders. Find one that is reputable, trustworthy and located near your residence. It’s ideal to borrow from a lender near you because it’s more convenient. However, you should also consider the auto loan rate they offer and their business practices.
5) Compare quotes until you find the best deal.
The Kelley Blue Book suggests getting quotes from at least 3 different lenders. It’s wise to shop around this way because it keeps you from missing good deals. Comparing a good offer against other offers brings out the real good ones and the true cost of the bad ones.
Use an auto loan calculator—free and widely available online—in comparing quotes. This tool helps you estimate the loan amount you can get approved for and the monthly payment you will most likely pay, determine the right loan term, and find out whether an interest rate offered by a lender is unreasonable.