Talking About Cars

If you’re about to start the process of financing a new car purchase, there are some things you need to do before you even look at cars or shop around for the best car loan. You can take care of some things early on that will make the whole process easier for you. You can also lower your chance of being turned down for a loan if you do some prep-work.

The most important consideration when you’re ready to buy a new car is determining if you can really afford it. Today, new car loans are harder to get than ever before. People with great credit are being turned down when they’ve never had a problem, just because the institutions they use aren’t lending money. So keep that in mind when you start looking for financing and don’t get discouraged if you’re turned down. You can shop around and hope for a better result elsewhere.

To minimize your chances of rejection, the best thing you can do is be an informed consumer and approach the lender with the facts. If they see you’ve done your homework in regards to buying a new car and looking for financing, you’ve increased your odds of getting a new car loan already.

So look at your budget and really determine whether or not you can afford the new car you want at this time. If your projected monthly payment eats almost the rest of your monthly budget, then it may not be a good idea. Because chances are, the monthly payment you’re considering isn’t even high enough. If you took the sticker price of a vehicle and divided it up, added some interest and figured that as your monthly payment, youunderestimated.

You have to consider the monthly cost of insurance, as well, as it will be part of your new car expense. You might have added in the cost of the insurance you have now, but that’s less than you’ll pay when you purchase a new car. So with that in mind, call your insurance company and get some estimates. If you have a specific car in mind (and you should—knowing what you want can help keep your costs down) get a price quote for insurance. Ask for quotes on a handful of other cars that you would consider if you couldn’t get your first choice.
Now refigure your budget and see how it looks. You should be able to determine about how much a monthly car payment you could afford. Is it not enough? You can always figure the payments on those other options you gave the insurance company to try to come up with a combination that fits into your budget.

It’s important that you can actually afford the payment and the insurance, and that you know this before you even go for financing or to a dealership. If your budget really doesn’t allow for a new car purchase that you want, you can make a plan to save more for the new car financing down payment.