Chances are you are part of the increasing number of buyers who do their homework well in advance before buying a new car. Many consumers research on pricing information, features, options, specifications and safety. If you are not paying cash for your car, check interest rates, your credit score, and available financing options with the same intensity. In most cases, the car dealers will work with you to explore financing options that fit your budget. It is also important to have a solid game plan on financing and understand the opportunities you have before you start the car buying process. Follow these steps to get the best car loan.
Do your homework
- Evaluate your financial situation and determine how much you can afford to pay.
- When doing your research, do not let price alone be the determining factor. Even though a particular model may fit your price range, it may not meet your needs.
- Compare interest rates and financing terms from multiple sources such as banks and the car dealers.
- Stay within the price range you can afford.
- Base your car purchase decision on whether it meets your needs rather than shopping for the largest discount or other financial incentives.
- Focus negotiations on car price-not monthly payment. A few extra shillings in a monthly payment can add hundreds or thousands of shillings to the total amount paid over the life of the loan.
- Similar to price, financing terms are also negotiable. Negotiate your financing terms just as you would negotiate the price of the car.
- Understand the value and cost of optional products such as extended service contracts, credit insurance, or guaranteed auto protection, and only buy what you need.
- Read the contract carefully before you sign, especially the small prints. Ask questions about anything you do not understand.
Protect Your Credit
- Make your payments on time. Late or missed payments may result in late fees, which can affect your ability to get credit in the future.
- If you financed the car, be aware that the bank, finance company, or credit union that bought the financing contract from the dealership holds logbook until you have paid the contract in full.
- If you have difficulty making your monthly payments, talk to your creditors in time, not after you have defaulted on the first payment. Work out a repayment schedule. Do not wait until it is too late.