For many people, a car is an essential purchase that they can’t live without. Not everyone has the option of using public transport or walking where they need to go, making a car a vital lifeline. But even if it is a necessary purchase, no one wants to pay more than they need to for their vehicle. Here are four ways to minimize the rate that you pay for a new car.
Research Your Options Beforehand
The number one tip for ensuring that you get the best rate possible when buying a car is to make sure that you have considered all of the options available to you. The more time you are willing to spend researching potential vehicles and dealerships, the better your chances of hitting upon the best deal available. Of course, before you can do any serious research, you need to know what you are looking for. Making the decision to buy a new car is one thing, but you need to be clear about exactly what you will do with the vehicle and what features you need it to have.
For example, if you are just looking for a vehicle that will get you from home to work and back every day, then virtually any car will do, although many of them might be overkill for your modest needs. On the other hand, if you need a vehicle that is going to be able to handle the daily commute to work as well as trips out with the family at the weekend, you will want to look at something more substantial and likely more costly.
Once you know what you are looking for or you can then draw up a shortlist of potential choices. With this shortlist in hand, it is much easier to start looking at potential financing and dealership options.
Investigate Your Financing Options
When you have a shortlist of models of car are suitable for your needs, you can then start looking at available financing options in more detail. If you are in a position to pay for your car outright, then this is going to be the cheapest option available. However, not everyone is in a position to pay for their vehicle or wait until they have access to the required funds. For these buyers, financing from the dealership is one way to go, but it will usually mean taking on a much greater financial burden.
The interest rates from most dealerships are considerably higher than they are for other forms of borrowing, such as a bank loan or credit union, so it might be worth exploring those options instead of dealership financing. There are also services like LendingTree, which enables you to get multiple quotes from competing lenders instantly.
One potential way of securing more generous financing terms than would otherwise be possible is to ensure that you get any firm quotes or offers from lenders in writing. You can then take these offers to other lenders and use them to negotiate better terms.
Improve Your Credit Score
Having a low credit score can cause a number of headaches for your personal finances, especially when it comes to seeking out funding or loans. With a low credit score, even the interest rates that you pay for credit card purchases are increased. That means that having a low credit score will continue to cost you money until you are able to address the issue. Before you start seriously looking for a new vehicle to purchase, you need to ascertain your current status regarding your credit score and what you can do to improve it. You can sometimes improve your credit score without having to spend a penny. If you are willing to pay just a little bit, you can turn your credit history around, repair your report, and reduce your outstanding debts.
The first step to improving your credit score is requesting a credit report so you can see exactly what your score is and why. Your credit score will contain details of your previous debts and your track record when it comes to keeping up with repayments. Unfortunately, many people find errors and discrepancies in their credit reports and immediately start panicking. If you notice any omissions or mistakes in your report, then you can use the credit agency’s dispute portal to boil a dispute and have the records corrected. You might need to mail in some physical evidence in order to complete this process, but even if it is time-consuming, it should not be too difficult to have erroneous records removed or updated.
Once you are satisfied that your records are accurate, you can then focus on repaying any outstanding debts to the best of your ability. You don’t necessarily have to pay off debts entirely, even just paying them down can make a difference to your credit score. As well as taking steps to improve your credit score now, you can also start to live a more financially responsible life. Making sure that you make repayments on time for utilities, credit cards, and other debts will keep your score as high as possible.
A better credit score will enable you to access better financing terms, so it is worth investing time and money to fix it.
Be Prepared To Negotiate
Whenever you are buying a car, you can potentially save yourself a lot of money by being willing to negotiate and haggle. Car purchases are one of the relatively few types of purchases today that you can still haggle over. However, you need to remember that the people you negotiate with when buying a car are professional salespeople; they already know every trick in the book. That said, being willing to open a dialogue with them could lead to a better offer.
With just a little bit of work, you can potentially substantially reduce the rate you pay for a new car. The better your credit score is, the better the rates that will be available to you, and the more willing you are to negotiate, the more opportunities you will have to reduce your rate further.