You'll need to make sure your credit report is in order when
you apply for a car loan. Get a copy of your credit report by contacting CRA
(credit reporting agency). Ensure it's accurate and free of any errors.
Remember that, lender's decision in granting you credit is
based on the information in your credit report. They take that information,
along with your credit application, and ask themselves 2 questions: Can you
pay? And will you pay? That's all they need to know to make a decision.
How much amount you can afford?
Remember the first question the car dealer asked you - how
much amount you can afford? You can only answer to that if you've done proper homework.
It's significant that you know your budget before you start shopping for a car.
You need to look at how much you can pay, each and every month, for a few
years, and still live comfortably. If you take on a loan that stretches your
budget too far, you may end up eventually losing your car. And that will look
really bad on your personal credit report.
It'll also help your shopping experience if you do as much
shopping around as you can, before your first visit to the dealer.
There's a
ton of information on the Internet, giving you all you need to know about
models, prices, options, colors, etc. Again, do your homework, and you're more
likely to pass the test.
Make sure you understand the financing terms before you sign
Financing has a lot of terminology involved, which you may
not understand. Don't be swayed by something you're not sure about. You'll
always have a chance to negotiate; take full advantage of it.
The following are
some of the things you need to know before you sign your contract:
- Negotiate
the cost of the vehicle.
- Negotiate
the down payment.
- Negotiate
the Extended Service Contract.
- Negotiate
credit insurance.
- Know
the amount financed.
- Know
the APR (Annual Percentage Rate).
- Know
if the APR is a fixed rate or a variable rate.
- Know
the finance charge.
- Know
the monthly payment amount.
- Know
who the assignee is.
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