Buying a car is a big financial commitment, so it's important to consider all that comes with it. You want to take your time and make sure you get a vehicle you like that fits your needs. Here is a list of five things to consider before buying a car.
1. Your Credit
Because of the expense they represent, most people finance their car purchases. But it's important to be in the know with your credit before taking out a loan. This is because your credit will determine if and where you can get approved as well as your interest rate.
You can get complimentary copies of your credit reports from Equifax Canada and TransUnion Canada. Head to each of their websites to learn how to request a copy of yours. You can also check your score for a small fee with those credit bureaus, or you can check it for free with some trusted third-party sources. Some banks and credit unions also provide their members/cardholders with free credit scores.
2. Your Budget
We can't understate how important it is to budget out your vehicle purchase. This is especially true if you are dealing with problem credit. You've got to evaluate your finances to set your car buying budget.
Take a look at your monthly income and find out what's left after factoring in your recurring debt (bills). Make sure to consider all of the expenses that come with car ownership. On top of the monthly payment, you should budget for insurance, fuel, and ongoing maintenance as well.
Tip: Never focus exclusively on the monthly payment. Always make sure that you are focusing on the total cost of the loan. Loan terms can be extended to make the monthly payment more manageable, but that only means you will be paying more in interest over the course of the loan.
3. Your Financing
Once you know your credit and budget situations, it's time to ask yourself a question. Do you want to buy new, buy used, or lease? Your income and credit situation can help you answer that.
When you are dealing with less than perfect credit, it makes it harder to get approved for a lease. Also, it can restrict which auto loan programs you are able to qualify for. And, of course, you don't want to borrow more money than you feel comfortable paying back.
When looking to get approved for an auto loan, most people start with their bank or credit union. Unfortunately, the majority of those places don't approve applicants with imperfect credit. If you are dealing with credit issues, it doesn't hurt to try, but you may have to locate a car dealership with special finance lender connections.
Now it's time to narrow down your options and find some vehicles that work for you. Think about what you need in a vehicle versus what you want. Identify the features that you must have, and consider your budget when identifying some realistic options.
In doing this, there's an endless number of resources you can check online. We'd recommend that you consult expert reviews, pricing guides, fuel economy figures and reliability ratings. Compare the vehicles you like in your price range against each other to see how they stack up.
After all that, it's time check out some dealerships in your area to see what's out there. Also, be on the lookout for incentives if you're shopping for new cars.
5. Your Time — Make Sure You Take It
You now have a better idea of your credit, budget, and vehicle targets. However, you still want to make sure that you take your time. Don't rush out and buy the first car you like just to be done with it.
What you should be doing is some comparison shopping to find the best price. Make sure to test drive any vehicle you are considering to get a feel for it. Also, you will definitely want to check the history of any used vehicles you are considering and, once you've made a decision, you'll want to have it inspected by a certified mechanic.
In a nutshell, financing a car is a big commitment. Just make sure that you end up with a vehicle you love that also fits your needs.
Financing for Borrowers with Bad Credit
These steps will help you successfully navigate the car buying process. But, if you are dealing with bad credit, you might be stuck on finding financing. At Canada Auto Loan, we help people dealing with credit problems find auto financing. Our process is free and our service is fast. Get started by completing our easy and secure online application today!