Preparing to Buy a Car and Apply for Financing

When you are looking to buy a car it can be an exciting time, but like any other major financial transaction it is best not to jump right into it, there are things you can do in preparation for your vehicle purchase to ensure you get the right vehicle and auto financing to suit your needs and your budget. If you aren't prepared you could end up with car or auto loan that you either don't like or cannot afford.

Research Vehicles

Using the Internet and other sources, find some cars that you find appealing and that fit your needs. For example, do you need a car with better fuel economy or something bigger to haul around family or equipment? Narrow the list by examining new or used price ranges on the vehicles you have selected. Next read reviews on the makes and models of vehicles left on your list and consider what they say about reliability and maintenance costs over the life of each of the vehicles you are considering. This should help you determine what kind of vehicle you are looking to buy.

Determine Your Budget

Before you decide on a particular vehicle and go to get an auto loan, you should determine what your budget it is. The following information should help you determine what your budget for purchasing a vehicle is:

• Income and debt: Determining how much money you earn every month and how much you are already paying each month for bills will tell you how much you can afford to pay for a monthly payment.
• Down payment: Do you have money in savings already that you can use to pay upfront for your vehicle purchase. Whatever you can afford to pay up front, you don't have to finance, which can allow you to reduce your monthly payment or purchase a higher priced vehicle.
• Trade in value: If you have a vehicle that you are going to trade in as part of your down payment on your new vehicle, you should determine how much the vehicle is worth. Take your vehicle to any nearby dealership and ask for an appraisal. You may want to take it to more than one dealership. This will give you a good idea on the cars value.

Clean Up Your Credit

Even if you think your credit is in great shape, get a copy of your credit report, there may be negative reports on there you are not aware of. You are entitled to one copy per year of your credit report from the three major agencies that track credit histories. The three agencies are: Equifax, Transunion and Experian. If your finances allow for it, pay off any legitimate past due balances and dispute anything you feel is incorrect or fraudulent. The better your credit report, the more likely you are to get the loan and interest rate you want.