Wise Car Financing Tips You Need To Know

Wise Car Financing Tips You Need To Know

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The gloomy news affecting the economy right now can have you believing that absolutely nothing is going right. Even people who have long been accustomed to saying that the glass is half full are rephrasing their terminology to the negative glass is half empty expression, falling prey to what they see to be the prevailing sentiment.

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Digging through the news you’ll soon learn that housing sales were up for the month of September while new cars sales are still about one million units, demonstrating that people with the means to buy something are taking advantage of lower prices and spectacular deals while they can. Indeed, before the economy does recover, finding a deal on a new car, trucks, minivan, SUV, or crossover vehicle can help you save thousands, but one problem could remain: how do you arrange financing?

Well, the folks at Carmax who happen to be the largest retailers of used cars in the country, have advice for their shoppers as well as for people in the market for new cars. We would all do well to heed the following financing tips, sage advice that can save you time, money, and headaches:

Maintain Good Credit

  1. Maintaining a good credit rating is generally a matter of simply paying bills on time.

  2. You should also be aware that overextending yourself on credit and actively shopping for credit could have a negative impact.

  3. Know your credit history by getting a copy of your credit report. Check your credit report annually to see if any information on the report needs correcting. You can get a free copy of your credit report at www.annualcreditreport.com, You may also contact any of the three nationwide consumer credit reporting companies:

Equifax: 800-685-1111, www.equifax.com

Experian: 888-397-3742, www.experian.com

TransUnion: 800-916-8800, www.transunion.com

Know How Much You Can Afford

  1. Determine how much you can afford for your vehicle purchase and monthly payments. Most financial institutions recommend that your monthly car payment not exceed 15% of your gross monthly income.
  2. Maximize your down payment to lower your monthly payments and it may improve your offer and likelihood of approval.
  3. Calculate how much your trade is worth and how much you owe on it to gain a better understanding of your total purchase. Go to any CarMax superstore for a free appraisal to determine the current value of your vehicle. CarMax will be happy to contact your current finance source for a payoff to help you determine your equity position.

Find a Car Retailer that Offers Competitive Finance Terms

  1. Look for a car retailer that offers competitive finance terms without the hassles of negotiation.
  2. Make sure the retailer shows you all available finance options. CarMax makes it quick, easy, and convenient to apply for financing and will show customers the details of all offers received so customers can make an informed decision.
  3. Only buy a car from a retailer that offers at least a three-day payoff option. If you find a better offer or decide to pay cash after you take the car home, this gives you the option to pay off the financing with no fees or penalties.

Be Prepared at the Car Retailer

  1. When shopping for a vehicle, take essential paperwork items with you, including the title and the registration for your current vehicle, your driver’s license and your insurance card.
  2. Before signing any paperwork, review all the documents and understand all terms including vehicle price, trade amount, financing, warranties, return policies and fees.
  3. Beware of any add-on or hidden costs not previously disclosed or explicitly requested by you.
  4. Do not hesitate to ask lots of questions. Be prepared to walk away if you are unhappy with your car-buying experience.

Certainly, preparation is the key ingredient when buying a new car so go into any sales negotiation armed with the information you need to succeed. Creditors may have tightened things up for consumers with average or poor credit, but if your credit is good or excellent, you stand to find the best auto financing deal while saving big bucks on your purchase.

(Source: CarMax)

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About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".