What to know before financing a car.

How much can you afford?

Be sure to budget your expenses to ensure you can afford the new monthly payment of a financed vehicle. The FTC provides a great budget worksheet for those looking to break out their expenses into a visible list. Having a list of your expenses in front of you can help you better determine if you have money available to save or spend or where in your budget you may want to cut expenses. Obviously, you should only be financing a car when you can afford to take on the responsibility of a new monthly payment.

Saving for a down payment on a vehicle will help to reduce the amount you'll need to finance, this in turn will lower your monthly payment. If you have a vehicle to trade-in, this may also cover the down payment. It's important to make sure you're not upside-down, meaning, you owe more on the trade-in car than it is worth. This negative equity can impact your financing agreement, not in a good way. It may increase the amount of your monthly payment or length of the financing agreement or both.

Is your credit report in good shape?

Take a look at your credit report and ensure that there aren't any erroneous negative incidents listed on your credit. Errors on your credit report could have negative consequences when it comes time to lock in a low interest rate. A late payment or default reported in error  on your report could be the difference between getting a low interest rate or not. AnnualCreditReport.com offers a free copy of your credit report from all three major credit bureaus every 12 months. You can request your free credit report at AnnualCreditReport.com online, by phone 1-877-322-8228 or mail.

If you have a weak credit history or none at all, you may be required to have a co-signer on your finance agreement. But keep in mind any late payments you make will impact both of your credit. Make sure you both can afford to take on the new monthly payment to avoid negative credit reporting.

What financing options are available?

You can either borrow money directly from a credit union, bank or finance company. Or you might apply for financing through the dealership. The great thing about direct lending from a bank, credit union or finance company, is that you have an opportunity to shop around for the best terms and rates before you even decide on a specific vehicle. You can then take your best offer to the dealership and see if they can beat it.

Are you getting the best deal?

Take your time and shop around before you finance a car. Make sure you're getting the best price for the purchased vehicle, trade-in vehicle and the best finance terms possible. The Annual Percentage Rate, length of term and price of the vehicle are all negotiable. Put together your own comparison chart and determine the best deal for you.


NADA - Understanding Vehicle Financing
FTC - Financing or Leasing a Car


Bonfiday Car Loan Table Footnotes

The above car loan information is provided to, or obtained by, Bonfiday. Lenders provide their car loan information to Bonfiday for advertising purposes. Each Advertiser is responsible for the accuracy and availability of its own advertised terms, rates and conditions. Bonfiday cannot guaranty the accuracy or availability of any loan shown above.

1 Advertisers may have different loan terms on their own website from those advertised on Bonfiday.com.

2 Advertisers may have different loan rates on their own website from those advertised on Bonfiday.com. Your actual APR will depend upon your credit transaction, your credit history and will be determined when a credit decision is made.

3 Monthly payment amounts are provided as estimates based on APR, Term and Loan Amount. Monthly payments will be greater if taxes and additional fees are not included in the advertiser's APR rates. Check with the advertiser for a more accurate monthly payment estimate.

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