Buying a car raises many questions. How will you finance the vehicle? Will you qualify for an auto loan, if you have bad credit? Should you buy a new or used car? We answer some of these questions for you.
Purchasing a car requires an auto loan lender to extend you a line of credit. Most people do not have $20,000 or $30,000 cash to purchase a car outright.
If you have less-than-perfect credit or poor credit, you may find it difficult to get a car loan. The key to getting a loan is working with a lender that caters to all credit types (poor, fair, good or excellent).
You may have heard about FICO credit scores. These scores are a way for a lender to determine financial stability. The better your credit score, the easier it is to get a car loan or any other loan. In addition, you get the best and lowest interest rates available.
If you have bad credit, your interest rate maybe higher than the standard rate. This should not deter you from getting a loan.
Why?
Because once you get a car loan, if you manage your payments responsible - this will help you raise your FICO score and allow you to refinance your auto loan to get a better rate.
If money were not an issue, alot of decisions would be easier. Most people would probably choose to buy a new car. However, since budget is always an issue, many of us must consider whether to purchase a new or used car.
Why a new car?
A new car has its advantages, including the factory warranty, the confidence of knowing that maintenance will not be an issue for a couple of years, significant rebate offers and the latest safety features.
On the other hand, a new car will cost you more.
Why a used car?
A used car is obviously cheaper. You can stay within your budget a buy a used car that would otherwise be out of your range, if you were to buy new. If you are considering a new car, try a certified pre-owned car, which is inspected rigorously and can save you maintenance dollars in the future.
The disadvantage to getting a used car is that you may have more maintenance issues in the future, even if it is certified. In addition, the original warranty may not extend to you, if it has expired.
Purchasing a car outright has its advantages and so does leasing a car. In order to make a decision, you must decide what is important to you. Do you want to own a car outright and keep it for 8, 10 or 12 years or do you want to have a new car every few years?
Professionals such as real estate agents or other sales people, often lease their vehicles because they prefer to drive the latest luxury cars to impress their clients. In addition, leasing may have tax advantages.
If on the other hand, you need a car that you want to hold on to for a long time and reap the benefits of having no car payments - purchasing may be the best option for you.
All credit scores considered: 400, 420, 425, 430, 450, 460, 470, 480, 490, 500, 510, 520, 525, 530, 540, 550, 560, 570, 580, 600, 610, 620, 630, 640 & up
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