Car Finance Tips and Advice

car finance

Not everyone can afford to pay the full amount upfront while buying a car. In most cases, financing is required. “Car finance” is basically a loan on a car that makes it able for you to have a car without completely owning it. It is still owned by a financing institution, whether it’s a bank, a credit union, or a car dealership, until the time when the monthly payments are paid to the full amount.

Car finance makes it very easy for people to afford a car. And if you are planning to get financing for your car, there are some tips and tricks that you should definitely know.

1. Be realistic about the car and its loan

By suggesting being realistic, we mean for you to have a realistic look at your finance, and not drench yourself deep in loans. The true cost of a car doesn’t only include its price, but it also includes the future use and maintenance of a car, such as insurance, gas, parking tickets, small and big repairs, and more.

If you buy a luxury car for finance, it will obviously take more gas and the repairs will be expensive. So, it is important to budget for the use and care of the car in the future when choosing a car to get financed.

2. Explore the vehicle options

If you are buying a car for the first time, refrain from making an uneducated decision. Be 100% sure that you want this car before you get it. You can do that by exploring your options. Talk to dealers, look online at private sellers, and go beyond your local area. People who sell cars on the internet may charge a shipping fee to deliver them to your area, but it can mean that you have more choices to discover your price range.

For that, you can apply for one of those used car loans.

You can also explore what kind of car you want – SUV, sedan, a hybrid model, etc. The more you explore the market, the more you learn, which is very important if you want to save as much money as possible.

If you are getting used car finance, it is important to look for the car’s history report, such as accidents.

3. Timing is everything

A lot of new car owners don’t know it. But when it comes to buying a car, timing is very critical. It is preferred that you wait until the end of the month to buy a car, especially if it’s one of the last three months.

Moreover, it is best if you go out to buy a car later in the month and earlier in the week (the first day of the last week of the month) because that is the time when salespeople are trying to meet their monthly target to get a bonus, and are much likely to negotiate to a lowest possible amount to make a sale.

4. Get it from the bank or a union

If you are to buy a car from a dealership, we suggest you get a loan for the car beforehand, from a bank or a credit union. Car dealers are likely to charge you a higher interest rate than banks or credit unions, even when the rates are low.

On the other hand, car financing plans by banks and credit unions are relatively more affordable and cost-effective.

5. Check your credit score

Your credit score is very important when you are applying for a car loan. If you have bad credit, you will be able to get the loan, but the interest will be charged a lot higher, especially if you have the worst kind of credit.

When dealerships offer low-interest rates, it usually means that it is for someone who has a credit score that’s touching the sky.

6. Get your quotes

It is possible that you research a few places for car loans, don’t forget to take financing quotes from all of them. It will help you make your mind about which loan to apply for.

This deal will be one of the most important purchases of your life, so you should have enough quotes to compare the monthly payments, full payment duration, and most importantly, the interest rate.

7. The full payment matters, months don’t

Whether you are financing a new car or getting second-hand car finance, the car financing company salesperson is likely to tempt you by offering low monthly payments if you choose to get a plan for, say 60-months. In the real world, this deal is not attractive at all. The monthly payments are lower but the full amount you will end up paying will be much more than you should pay.

You should negotiate in a way that you pay the same amount of monthly payments for a 42-month plan. Remember: the paying term should always be as shorter as it can be.

8. Negotiate till the very end

When you are hustling for a car loan, don’t hesitate to negotiate as much as you can. A lot of people get intimidated or fooled by the attitude of the salesperson, whether you are negotiating for a loan or a car.

The right thing to do is to be a person in control of the negotiations. Start with a ridiculous amount, and work your way backward.


Since most of us are not sitting on a huge pile of cash, we need to apply for loans to buy a car. But certain loans can take more money from you than actually giving you the benefit. And to avoid such loans, it is crucial to be familiar with the whole process and make decisions wisely along the way.

Keep all the tips in mind when you are getting a car financed, do not get fooled by the small benefits because those actually give you loss in return. Be smart and play safe!


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