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Buying a Car: Financing 101

You’ve done all the research you can on the new car you want to buy; you know your budget, gas mileage, what features you want, make and model, even what color you want. But have you done the same extensive research when it comes to financing your car? We’ll break it down for you, so you can come to us confidently when you’re ready to buy.

Set Your Budget First. As a general rule your car expenses shouldn’t exceed 25% of your income. This includes gas, insurance and payments. So set your budget and figure out what the total amount you’re willing to pay, so when you walk on the lot you’ll know exactly what you have to spend.

Know your credit score. The interest rate that you are given is based largely on these numbers. Using free credit reporting sites (like CreditKarma) will let you know exactly where you stand so you’ll know where in the range you’ll fall when it comes to interest rates. Generally a score about 680 is considered prime, below 680 is sub-prime and under 550 is considered poor credit. The credit bureaus treat multiple credit inquiries within a 30 day period as a single inquiry in a which is good to know if you have the dealerships pull your credit.

Check dealer incentives. Make sure you go online before you come to the dealership. Car manufacturers run lots of specials and incentives to get you in the door so know before you go or ask when you get there so you get the best interest rate and financing deals available. At Fred Beans we have AutoRewards, a program designed to discount the cost of your next new vehicle purchase, so knowing your points value can save you money in the long run!

Know Your Approximate Trade In Value. If you are going to be trading in your car, you want to go in having a good idea of what you think it’s worth. And once the dealership appraises it and you come to an agreed amount then this will come off the top for the price of your car. Knowing an average amount beforehand will allow you to set your budget and understand more clearly what your monthly payment and total cost will be.

And when you’re ready to buy visit your local Fred Beans location and we’ll be happy to help!

 

 

 

 

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