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How to Buy a Car When Money is Tight

Having a car to get around can be a necessity in a lot of communities, so if you currently lack a car or your old car is nearing its last days you need to think about purchasing a new vehicle. If you don’t have a great deal in your savings account or are suffering from a poor credit score, the process of purchasing a car can become more difficult. The good news is that there are multiple ways to make the process easier and improve your chances of finding a vehicle that fits your needs at a price you can manage.

Improve Your Credit

The most important thing you can do to improve your purchasing power at the dealership is to work on your credit. By lowering the balances on your accounts and establishing a track record of not missing payments you will see your score go up and with it your ability to get better loan offers. That means affording more expensive cars and having better rates on the loans you receive.

Find the Right Dealer

Not all dealers are created equal when it comes to working with customers to find a deal that works for everyone. If one realtor turns you down you may be able to find a similar car at a different lot where the salesmen are able to work with you better. The more lots you visit the more opportunity you have to find a dealer who can work with you.

Extend the Terms

One simple way to make the terms of your loan more manageable in the short term is to extend the length of the loan. When you pay your car off over five years instead of three, for example, your monthly costs can be significantly lowered. The tradeoff is that a longer loan means more interest so if your finances change and you can afford higher payments you should consider paying above your premium to lower long term costs.

Build Up a Down Payment

When making a financed purchase there are generally two parts to the payment — the down payment and the loan. The greater your down payment is the less money you will need to take out on loan. This means better rates and lower long term costs as a result of interest.

Seek a Pre-Approval

Some people prefer to shop with a known hard cap on their costs. This makes it easier to stay on budget and also ensures that you don’t get your hopes up only to be denied financing when it comes time to make the deal happen. If you enter a lot with a pre-approval you know that any car within your budget can possibly be your new car.

Lose the Frills

Modern cars come with a wide range of bells and whistles to add on to the stock models which can have a positive effect on your experience in the car. While these extras can be nice they also can drive the cost up in a hurry, and the compounding effect of interest means they will cost you more than the sticker price. Only opt for extras you know you will get your money’s worth out of.

Save on a Used Car

Just because you’re looking for something new to drive around in doesn’t mean the car has to be literally new. Often the best deals around come when you upgrade affordably with a used car. Many used cars are still in great condition and can have very low mileage, but they still carry the benefit of more affordable rates when compared to a similar car which is fresh off of the assembly line.

Buying a car can change your life for the better. If you need a car but money is tight, consider these options to make the process easier and more affordable. Head out to a dealer today and find the car you’ve been looking for!

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How to Buy a Car When Money is Tight