7 small changes that can recalibrate your auto financing


We’ve all been there. You enter the showroom at a dealership and there it is – your dream car. Just like that, you’re ready to sign on the dotted line.

You get your keys and drive away.

Then what? Insurance, registration, monthly payments – all the way less glamorous stuff about car ownership starts to surface.

The good news is a few small changes before you start shopping can make a big difference. Check out these quick tips to reignite the thrill of vehicle ownership!

1. Think about your auto financing early in the process

Choosing your auto financing is a very important part of purchasing a vehicle. There are critical questions to be answered.

  • Should you buy or lease?
  • How will making a monthly payment impact your monthly budget?

These are just two examples of items to consider that can also impact how you shop for a vehicle.

 2. Understand your credit score

Your credit score is important to the lender and it’s part of what goes into your interest rate. According to the Consumer Financial Protection Bureau (CFPB), your credit score predicts how likely you are to pay a loan back on time.

When you take the time to stay in the know about your credit score, it can help with all kinds of things, including what kind of rate you might expect when purchasing a vehicle.

3. Consider your full, monthly budget

One of the best ways to save money is by accurately calculating your monthly expenses, also known as creating a budget. Once you know how much money is going out, you can see how much you have left to buy a vehicle and what type of payment you can afford.

This is particularly helpful when choosing between a new or pre-owned vehicle.

4. Get preapproved

Generally, when you get preapproved for financing, you can do so without the concern that your credit score will be impacted. Doing so can provide you with an idea of how much you can comfortably spend.


5. Make a down payment

Increasing or placing a down payment is one of the best ways to impact your auto loan. When you put money down, you’re lowering the financed amount. That means less interest you have to pay while you’re paying your loan back. It can also lower your monthly payments!

Using your tax refund as a down payment on a vehicle is one way to increase any amount you may currently have saved.

A down payment doesn’t have to be cash. If you have a vehicle that is paid off, or you owe less than it is worth, consider using it as trade equity toward your next vehicle.

6. Try not to focus only on the monthly payment

It’s easy to get caught up on how much you’ll be paying every month, but doing so may cause you to pay more over the life of the loan. Things like stretching payments out over a longer period of time can really add up, so think twice before you agree to that loan term extension.

7. Shop insurance costs before you buy

People often forget the cost of insurance when buying a new or pre-owned vehicle. But it’s a real cost, and it’s not cheap.

If you’ve settled on a vehicle, shop several insurance companies to find one that works best for you and your budget. Or, if you’re deciding between two (or more) vehicles, checking on insurance costs for each might help you make the decision.