Owning a car is everybody’s dream. But, buying a car is not an easy task. There are several options you can go with if you have decided to buy a car. You may choose outright purchase, or opt for the auto financing. In fact, it is the most common to find people opting for Auto Financing options when it comes to buying a car. How about checking a few options so that you can save smarter when going with Auto Financing? Let us check out a few tips that may be helpful.
Save Smarter With Auto Financing
One of the huge mistakes that we normally commit while opting for the Auto Financing is to not taking the total cost of auto financing into account. You may be made to believe that you are getting a great deal with the 6 or 7 per cent interest for a six-year period. But, in reality, you may be spending a lot if you consider the actual cost that you have incurred.
The best way is to use a reliable Car Payment Estimator to arrive at the best possible rates. Most auto calculators do not provide you with a realistic picture of the actual cost you may be incurring. Opt for a calculator that offers you a more correct estimate taking into account the different types of fees, taxes and other payments you are expected to make. This can help you assess the viability of your car financing in the realm of reality.
Having said that, it is wise enough to opt for a few tips while you go for an auto financing option. These tips can be helpful in making smarter decisions to help you save money.
Get Your Credit Score Right
Have you ever given a thought to your credit score? Well, if you haven’t, it is the right time to assess it when you are about to opt for auto financing.
Getting car finance may not be tougher even if you have a low credit score. Banks will provide you with the car loan because it would be easier for them to possess your car if you fail to pay. However, you may need to pay considerably higher rate of interest if your credit score is not something to boast about. But, in your excitement, you forget to ask for better rates. Dealers and banks tend to exploit this thus stand to benefit more.
You can check your credit score with a few online tools. If you are aware of your credit score, you will be able to negotiate for better finance options in tune with your credit score.
Keep the Tenure As Short as Possible
Shorter loan tenures tend to offer you lower rates of interest and in turn, your total cost acquisition will be quite low. Of course, this will mean more monthly payments. Check the exact tenure and the corresponding monthly payment that you can afford each month.
It should be quite evident that the more time you take to pay off your loan, the more interest you will continue to pay. M=Longer tenures also attract a higher rate of interest. That will, in effect, further increasing the cost of owning your car.
Car dealerships and banks will showcase the lower monthly payments to make it more attractive. You will be tempted to opt for it by looking at the low monthly payments. But, you fail to realise the cost addition that this can make to your auto financing in the long run.
Pay The Taxes and Other Fees In Advance
This is yet another mistake that many of us opting for auto finance tend to commit. Do not add the miscellaneous payments to the auto finance amount you are going to make. Instead, check if you can make those payments right away. Examples of these extra costs include sales taxes, road taxes, charges for the extra accessories and registration fees.
Again, dealerships are eager to add those amounts to your car financing and you will be tempted too, given the fact that you need not pay these charges from your pocket right away. But, this will only increase your liability ahead. You are increasing the finance amount without any value addition to the purchase price of the car you are going to own.
The Concluding Thoughts
Well, if you really want to be smarter enough while opting for car finance, the first thing you need to work out is to check the total cost of acquiring the car. Opting for a loan where the amount of the loan is not worth the price of the car, it is generally termed as underwater or Upside Down financing. This can indeed be a risky situation in most cases as long as financial stability is concerned.
Opting for the best possible estimation of car finance should ideally be helpful. We would recommend you opt for efficient Car Payment Estimator who can guide you to the best possible option to stay smarter with your auto financing and reap the benefits.