Auto Finance Tips for the First-Time Car Buyer

The world of auto finance can be a boon or a burden. Nowadays, everyone has to have a car. Your place of work is too far, too much pollution outside, your friends each have one… the list of reasons goes on and on. So what happens? You end up getting a car, even when you can’t afford it! So here are some helpful tips for the first-time car buyer seeking to apply for a car loan:

1.     Think about this - if you need a loan to buy a car, you probably can’t afford it. Are you sure you can afford the monthly payments?

2.     If you absolutely must have a car and need to apply for an auto loan to get it, seek financing from your credit union. They’re non-profit and don’t pay stockholders so you get a better deal.

3.     Bank loans may or may not be your best option especially if you’re not a client of theirs. Banks have car loan standards and can’t be flexible the way another lender can be.

4.     Beware of car dealer financing scams – 0% deals and long-term loans make it harder for you to stay afloat.

5.     When applying for an auto loan, know your credit score beforehand. A bank or lender can do your credit score for you, but they have ways of rating you unfavorably so that you end up with a higher loan to cover the “added” risk.

6.     Consider using your home as equity for a loan. You’ll think twice about defaulting on your monthly payment.

7.     Know auto loan terminology, such as APR, all-in, prime rate. If you don’t, your lender can sweet-talk you into believing anything.

Written by: Katrina Marion

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