If you’re in the market to buy a new or used car, it can be an exciting time prospecting which one you’ll be driving. However, before getting behind any wheel, sit back and take a smart look at this long-term financial responsibility.
Before you fall in love with a car you can’t afford, know your income and budget for all expenses associated with the ride you see yourself in – not just the dollar amount of the loan. The car’s fuel efficiency, insurance and repairs all add up. Consider the projected life of the vehicle too, or you could end up paying a car loan long after the vehicle dies.
If you’re looking to get the lowest rate for the loan amount needed, know the quality of your credit so you understand the interest rate ranges you’re likely to fall into. Also, a larger down payment equals a smaller loan and less interest paid over the life of the loan.
Another way to make sure you’re realistic about your choice of car is to get pre-approved at your credit union or other financial institution before shopping. With this step, you’ll know exactly what you can afford so your eyes don’t wander elsewhere. One tip before pre-approval is to get your finances in order before applying for the loan.
As always, take a look at the fine print before signing on the dotted line. Make sure you know your interest rate, any fees or penalties and the length of the loan. That way, you can stop worrying and spend more time enjoying your new set of wheels!
By Michael Poulos, President/CEO of Michigan First Credit Union