Some people assume that they have to get financing at the dealership where they purchase their car or truck. This is wrong.
Getting the loan through the dealership can be more convenient, particularly if you’re car shopping in the evening or on a weekend, when the banks are closed. But it’s the most expensive way to go.You should analyze your finances and figure out just how much of a monthly payment you can afford—before you fall in love with a car that’s outside your price range.
The credit requirements for borrowing to buy a car are usually not as stringent as for borrowing to buy a house. As long as your credit score is above 500, you should be able to get some form of new car loan. But—as with mortgages—the lower your credit score, the more cash you’ll have to put down and the more interest rates you’ll have to pay. These factors (particularly the down payment) are what take some people out of the new car market.
Another factor that most people don’t consider is the true cost of car ownership. This includes:
* maintenance costs;
* depreciation (which can vary dramatically by model and manufacturer);
* interest on your loan;
* taxes and fees;
* insurance premiums (which also vary dramatically from vehicle to vehicle);
* fuel costs; and
* repairs.
Several Internet Web sites have tools that will help you determine the true cost of ownership for a vehicle.
