Easy Ways To Determine If You Can Afford Your Car Loan
Choosing a car loan option is just as important as selecting a vehicle. Although we always try to get the best deal, in reality, we are limited. Shopping for an affordable car loan option can be quite daunting especially if your credit is not ideal for a prime car loan rate.
Despite that fact, there are a lot of auto loan lenders who offer no credit check car loans at a reasonable interest rate. You just have to find the right one. With that said, here are easy ways to determine an affordable car loan and secure an approval for it.
Focus On The Total Cost
While it is important to ascertain that the monthly payment involved is not too much of a burden, it is more crucial to look at the total expenses of the loan.
When making a comparison of various car loan rates, ask for the Annual Percentage Rate or APR. This will give you a more comprehensive perspective on your auto loan. To give an example, a $15,000 auto loan for 7% APR is $500 more expensive than the same loan with only 5% APR. That is already a huge difference on the potential savings that you can have!
Another mistake that most car buyers make is opting for a longer loan term duration. Technically, an extended loan term takes up more interest payments and will lead to more negative equity on your purchase. Although the monthly payment is much lower, you will be paying more for your car than its actual worth due to overall interest payments. Although not all cases are the same, it is recommended to pick a short auto loan term (i.e. 3 to 5 years) than a longer one (i.e. 7 years).
Know Where To Shop For A Loan
This not only applies for those who have bad credit, but for all types of credit. Generally, dealership financing have more expensive car loan rates than lending institutions. If you want to get the best deal that your credit can afford you, it is better to shop for an auto loan via online auto loan lenders. For example, New Car Canada is an online auto financing company that provides guaranteed approval for any type of credit. They have rock-bottom low interest rates and the fastest loan processing in the country. To know more about their options, apply here.
Moreover, banks have stricter requirements, fixed interest rates and are more likely to only accommodate those who have exceptional credit scores. If you have a good credit score and already established strong ties with your bank, you can also opt to get financed by them.
Furthermore, it is better to prioritize securing a car loan first before shopping for your next vehicle. Getting pre-approved for an auto loan makes the whole process easier and faster especially for those who have a “not-so-ideal” credit. Additionally, this will also ensure that you won’t go past the your budget. Unlike in car dealerships, they might talk you into buying additional purchases that will make the loan more costly for you.
Save For A Down Payment
If possible, opt for a down payment on your car purchase.This gives you equity during the initial loss of value your vehicle experiences (approximately 20% initial loss) as soon as you take off your dealer’s lot. Moreover, a down payment lessens your principal debt thus decreasing the total amount of interest payment you need to pay for. This is another way of making sure you can afford your car loan.
Picking The Right Car
The right car is the one that you can afford to pay off and meets your needs at the same time. Weigh your priorities carefully and opt for a car that will give you the best of both worlds – practicality and satisfaction. Although it may sound easy but it actually isn’t. The Adrenalin rush that you feel as you go through the selection process will make you lose track of your objective. As much as possible, stay the course in order to avoid regrets in the end.
Remember, no matter how favorable the car loan rates are, it is still your duty to pick the car that you can afford. If you are trying to build (or fix) your credit, it is better to choose a more practical car that can still satisfy your wants and needs.
Still searching for the right auto loan? Try New Car Canada today. We provide instant auto financing approval regardless of credit. In fact, you can get approved even with no down payment, no cosigner, and no SIN. Our application process is 100% FREE and takes only 30 seconds to accomplish. You can apply using your smartphone or computer at anytime and from anywhere in Canada. Click the Apply Button Now and get approved in 24 hours or less!
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