What are Some Financing Tips for Used Car Buyers?
The time has come, and you have finally found the perfect used vehicle for your needs and budget. Now you need to figure out the best way to pay for the vehicle. Like 85% of all vehicle purchasers, you probably plan on buying your new ride with some type of financing.
Before you make the final purchase, consider these helpful financing tips for your next vehicle.
1. Check Your Credit Score
First of all, what is a credit score? This number is a representation of the creditworthiness of an individual and is determined by an analysis of a person’s credit files. These credit files are sourced to credit bureaus or reporting agencies that assign a three-digit number to you, which is your credit score.
One thing to note, your credit score affects your ability to get approved for financing options on a new vehicle. By checking your credit score upfront, you can correct any mistakes you see on your credit report as well as prepare you for what purchase and financing options are available to you for the purchase. This could potentially help you qualify for the car you are hoping to buy.
2. Set a Budget
Setting a budget is important before you even set foot on a lot to look at new vehicles. Having an idea of what you can afford in mind before you apply for financing will make a smoother process not only for you but also for the salesperson you’re working with to find that new ride
Take time to look at your budget to see how much you can pay each month. Some things to consider as you build out a budget:
- monthly mortgage or rent payments
- cost of utilities for your home or apartment
- home and vehicle insurance and if it is paid monthly, quarterly, semi-annually or annually
- any childcare or or education costs you or your children might have
3. Consider the Length of Term
Once you create a budget and know the monthly payment you can afford, use an online payment calculator or similar tool to figure out the vehicle price range you can fit in your budget. This will allow you to see how much a monthly or even a bi-weekly payment will be for your new vehicle so you can make sure that you can afford the vehicle with your budget.
While you’re using the online payment calculator, you should also be able to adjust the term length of the financing option you’re considering. The length of the financing term can affect your monthly payment and the vehicle price you can afford. CarHop has shorter terms than many dealers, including terms often between 24 and 36 months.
4. Make a Down Payment
A down payment is the money that you use when purchasing a vehicle to make the initial payment. It is not part of the financing on the vehicle.
If you’re able to afford it, making a larger down payment on your next vehicle can give you more options, shorten your term, and reduce your monthly payments.
6. Line Up a Co-Signer
If you are worried about your credit history, having a co-signer, also known as a co-buyer, may help you get approved faster. This is a person that agrees to take legal responsibility if for some reason you cannot pay back the loan. This helps lenders ensure that their loan will be fulfilled since they are taking on a risk and can also help you secure the funds to purchase your new vehicle faster.
7. Try to Pay More than the Minimum
Making the payments on a new vehicle is a must. However, if your budget allows, try to pay more than the minimum payment amount on your car payment each month. This will help you own your new vehicle outright faster and, in some cases, may even help improve your credit score which can help you secure financing in the future for other things such as a different vehicle or new home.
The CarHop Advantage
Are you ready to buy your next vehicle with a financing option? Our expert team is here to help people drive and get you into your new car today. You can start the fast and easy approval process right on our website. For assistance with used car financing, contact your local CarHop dealership directly.