Purchasing a new car feels like a rite of passage to many people. The exhilaration of knowing you’ve got your own four wheels offering a freedom rarely rivaled is a moment to be remembered in life.
More importantly, you want the process of purchasing your first new car to be without marr. Set yourself up for a smooth purchase, and make sure your finances are in order before you go to purchase a vehicle.
Here is a quick breakdown of a few personal finance tips to help you get yourself into the car of your dreams without all the hassle.
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Do a thorough inventory of your credit
If you want to purchase a new car, you’re going to have to present an acceptable credit history to lenders. It’s a good idea to check out your credit situation before buying a car.
Take full advantage of credit apps like Credit Karma, and do everything possible to give your credit report a little shine before you go out to purchase a vehicle. You may need some time to achieve this step, so start early.
Figure out how much you can afford
Take a good look at your finances and the future reports of what you’ll be paying out to get an accurate estimate of what you can afford to pay for a vehicle. Try using one of the web’s free car loan calculators to get a better idea of your scope of affordability.
Unless you have quite a bit of money lying around, you’ll be paying a car payment for a few years. It’s best that you make sure you can sustain the payment you take on when purchasing a new vehicle.
Save for a down payment
You’ll need a down payment on a new car as a sign of good faith to your lender. Just as you would do when purchasing a house, it’s a safe bet to save at least 20 percent of the cost of your prospective vehicle for a down payment. A healthy down payment will get you a better deal on the remaining cost of the car.
Get pre-approval for a car loan
Getting pre-approval for a vehicle loan makes the process of purchasing the car you want much easier. When the finances are already in order, you won’t have any trouble finding something to drive off the lot.
Determine what you’re doing with your old car
You’ll also want to decide beforehand what you’re going to do with your old vehicle. If you’re going to get rid of it, you could use it as a trade-in on your new vehicle purchase to save some money. You may also choose to sell it on your own to make some money towards a new vehicle.