Buying a new car for personal uses is the thing we usually do periodically, in line with increasing of our income and lifetime period of current car. It’s good if we can buy it by cash, but in most case we have to buy it by using auto financing due to limited cash on our hand.

Instead of get rush going to car dealer and experience unexpected bad things after that, here is some easy step by step tips to do for best auto financing :

1. Set up maximum monthly budget of loan repayment

Setting up a budget is important thing, to ensure our capability in making good loan repayment. Once we have certain amount of fixed budget, then we can start to choose our dreamed car by choosing the one which suitable with our budget. We can do simple simulation using online car loan calculator, compare several different set of car price, down payment, and term of loan. With this kind of simulation, we have one comprehensive picture about the most suitable car to purchase under current budget. Please see this basic budgeting post if you still confused how to set up the budget.

2. Find a good lender

We can find them fast and easy by online. By sending some basic information, we can get offering from some different online lenders just in minutes. Then, make a comparison between them. Two factors should be noticed when choosing a lender. The first is quality of lender, by checking their reputation as a company comparing with other lenders, popularity among other borrowers, and variation of financing program they provide. Second thing is their competitiveness, including offered interest rate and other charged fees. Several things will determine interest rate offered by lenders, but the most dominant factor is our credit score rating.

3. Enjoying car windows shopping before auto financing approval

When we have decided a lender, just send our loan application and waiting for their approval. Usually it needs a couple of days. While waiting for the approval, we can do car shopping by visiting car dealers, collecting offering letter from them, and choose the best dealer. Once our application is approved, then we have decided from where we will buy the car.

4. Ensure that we have loan payment protection insurance

We can’t expect the future anyway. This protection is important to secure our loan repayment in case something happened to us and we cannot continue to perform monthly repayment. Some lenders provide such protection together with their financing package. If our lender doesn’t provide it, go online and find good reputable insurance company easily.

5. Maintain good repayment performance

Yes, we have a new car now. Further important thing to do is to maintain good repayment performance until the end of financing period. It’s necessary to maintain good personal reputation since today is not the end of the world. With good credit score, we can get easy loan approval from good lender for any loan we need in the future, and enjoy lower charged interest rate.

Tags: Auto Financing, Loan