When you're eager to grab the keys to your first set of wheels, the last thing you want to do is put on the brakes to consider finances. The anticipation of finally being free to go where you want, whenever you want is overwhelming. But doing a little prep work before you start shopping can help keep more cash in your bank account. Before you test drive your first vehicle, take the following steps and get in gear to save money.
1. Do your research
Edmunds.com's True Cost to Own® calculator can help you determine the annual cost of ownership for different vehicles. This is important, because you'll need to prepare your budget for more than a loan payment. The calculator uses the year, make, and model to estimate additional costs like fuel, maintenance, and repairs. You'll also want to investigate insurance rates for the vehicles you're most interested in.
2. Boost your credit score
If you'll need to apply for a car loan, a good credit score typically equals a lower interest rate. Incorrect information on your credit report lowers your credit score, as do high credit balances. Request a copy of your credit reports from AnnualCreditReport.com. Reduce some of your debt if you can, and review each report for errors. Follow each bureau's dispute policy to remove incorrect information.
If you don't have a credit history, but pay rent each month, you can still demonstrate you're a good credit risk. Give your credit score a boost by asking your landlord to report your on-time rent payments to the major credit reporting bureaus. If a potential lender uses FICO® Score 9 to determine your credit-worthiness, your timely rent payments will be considered when making a credit-granting decision.
3. Explore your financing options
Should you buy new or used? Is leasing a better alternative? The answers to these and other questions will depend on your specific circumstances, but learning about these options early can help you make the best choice for your wallet. Consider your financial goals before you decide on financing terms. For example, will you still be able to save for a down payment on a home and pay off a $5,000 credit card balance in three years if you sign a seven-year auto loan agreement?
When you're ready, head over to CUDL AutoSmart, a stress-free way to search, shop, and finance your first car from the comfort of your home. Find car dealership reviews and ratings from other car buyers, lock in a low price, and secure an affordable auto loan all in one place.
To determine if buying, leasing, or our Better Than a Lease product is right for you, download Your Guide to Smart Auto Financing, our free eGuide! It’ll give you all the tools and tips you need to make the best decision about financing your next set of wheels.
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