When shopping for a car, most people do not have the savings to pay for a vehicle with cash. The way it works for most car buyers is that they take out an auto loan to finance the purchase of their new vehicle. It can take several months of saving up and working to build your credit score in order to qualify for a decent rate on a loan. The balance of the car’s price is then paid in monthly installments, usually for five years. While this is the most traditional way to finance a car, it is by no means the only way.
When you purchase a car from a dealership – no matter if it’s new or used – you have a few financing options at your disposal. The dealership will offer you assistance in arranging an auto loan through a preferred lending partner, often in connection with the manufacturer of the car you’re purchasing.
Let’s say you’re buying a Chevrolet. The dealer works with with GM Financial or a similar lender to ensure your loan is set up according to the agreed monthly payment and the appropriate term for the loan. Should you prefer to arrange financing with your own credit union or bank, you may wish to research this and make arrangements prior to the day you will take delivery of the car.
You can also ask your salesperson if there are any current financing promotions, such as 0% interest or a rebate for going with a certain plan. You might also discover specials for college graduates or military personnel or active duty – it never hurts to ask!
Trading in your old car can help to reduce the costs as well. Find out the value of your car as a trade-in and put it toward your down payment. Then ask about how your trade-in might affect your final purchase price and monthly payments.
Should you discover that you do not have sufficient credit to secure a loan, don’t worry! You can look into an option like no credit auto financing in Greeley CO. Getting an auto loan is still possible even if you don’t have a strong credit history, and in many cases, even if your credit rating is lower than you would like.
If that is the case, you might also wish to consult a close family member to discuss if cosigning on the loan is something they might be willing to do for you. The person who backs you as a co-signer guarantees your debt, meaning he or she will pay back the loan if you do not. Cosigning on a loan is not a decision to take lightly, and you should strive to pay back your loan on time and in full monthly payments so that co-signer is never put into the position of having to pay your bills for you.
Cars tend to be one of the bigger purchases we make in life. Those car payments keep coming on a monthly basis until you’ve paid back the loan, so be sure to use good judgment and make smart choices when it comes to financing your next car.