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What To Know When Financing A Vehicle

By Expert Author: Anna Wisner

Financing a vehicle can be an intimidating process for first-time buyers. After all, there are thousands of dollars at stake. Everybody wants to get the best possible deal. Relax -- you don't have to worry. If you do your homework ahead of time and plot your buying strategy, getting vehicle financing doesn't have to be a stressful experience. You can save money and put your mind at ease with a little bit of planning. Here are some easy tips to help you get a great deal:

Arrange financing before you buy
One of the easiest ways to save money and streamline the buying process is to secure your financing before you reach the dealership. This allows you to focus all your attention on getting the best deal. More importantly, it also allows you to shop for the best financing deal at your leisure -- rather than being forced to secure financing on a tight timeline while purchasing your vehicle.

Know your credit history
Savvy buyers will always download a copy of their credit report before making a major financial transaction. Not only will this give you a good idea about what kind of rate you'll qualify for, it also might save you from paying too much. If there is a mistake on your credit report, your score might be unfairly low. Over the course of a multi-year vehicle loan, that lower credit score could mean hundreds or thousands of dollars in fees you shouldn't be paying.

Consider warranty and sales tax options
Before you buy it's smart to consider how much money you'll have available to spend on things such as sales tax and extended warranties. Often you can choose to finance these items along with the price of your car, though whether you should do so depends on your financial situation. You'll end up paying more in interest, but deferring payment will allow you short-term financial flexibility.

Down payment considerations
It's important to determine how much money you are willing or able to spend on your down payment. A higher down payment will save you interest costs, but you don't want to overextend yourself financially. Qualified buyers are sometimes able to make a very small down payment, or forego a down payment altogether. Whether it's wise to do so depends on your near-term financial situation.

Figure out the terms of your loan
It's a good idea to figure out what kind of loan terms work best for you. These days it's possible to take five, six, or even seven years to pay back your loan. Your monthly payments will be lower with an extended term, but you'll also pay more in interest. It's important to determine which loan term works best for you financially, as you don't want an unaffordable monthly payment but you also don't want to pay more in interest than necessary. Figuring out your financial "sweet spot" will help you accomplish this. A general guideline is to spend no more than one-fifth of your disposable income on your loan.

Follow these easy guidelines and you'll be surprised how easy it is to secure vehicle financing on your terms.

Yes Cars and Credit is dedicated to getting you the best loan in South St. Paul, no matter your credit history. If you are searching for an auto loan in South St. Paul using the keywords new car loans St. Paul or used car dealer Inter Grove. Visit Yes Cars and Credit for your next auto loan!

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