So you’ve picked out a new vehicle that you’re excited about, but before you can drive it home, you need to arrange financing. When you finance a vehicle through our Mazda dealership, our team will help you arrange a great rate and other favorable terms. But there are several steps you can take on your own to get the best possible car loan.
5 Keys to Getting a Car Loan Through Your Mazda Dealership
1. Check Your Credit Score Early in the Process
Having a bad credit score won’t prevent you from arranging financing, but it may mean that you face a higher interest rate. Checking your credit score early will give you a good idea of what type of interest rate you can expect to be offered. It will also help you begin to understand what type of monthly payment you’re likely to have and how much to budget.
If your credit score is low, you might even consider postponing your purchase while you work on improving it.
2. Always Make a Down Payment
It’s always smart to make a down payment on a vehicle, and putting 20 percent down is a good figure to aim for. When you make a down payment, you’re reducing the amount you need to borrow for the vehicle, and the less you borrow the more likely you are to be offered a favorable interest rate. Making a down payment reduces the cost of financing your car.
3. Pay Extra Fees in Cash
When you purchase a vehicle, there are often extra fees tacked on, like sales tax and the cost of documentation and registration. We can easily include these costs in your loan, but some consumers opt to pay cash for them instead. Covering those fees with cash is another way of keeping a lid on the total amount you’re borrowing, qualifying you for a better rate in the process.
4. Keep Your Term Short
The term of your loan refers to the number of months you have to pay it back. Generally, a longer-term loan results in a lower monthly payment, and that can be appealing to many buyers. But the longer you stretch out repayments, the more you pay in interest over the life of the loan. Going with a shorter-term loan will save you money.
5. Consider Enlisting a Co-Signer
If you’re a first-time buyer with limited credit history, or if your credit score could use a little work, bringing on a co-signer may help you snag a more favorable financing package. A co-signer is usually a family member or trusted friend who is willing to have their income and credit history included as part of your loan application.
Your co-signer also pledges to repay your loan if you aren’t able to. Bringing on a co-signer means you represent less of a risk to potential lenders, and you’re more likely to be offered a low interest rate.
By following a few simple rules of thumb, you’ll be able to arrange the best possible financing package. When you’re ready to finance your next vehicle, head to Tom Bush Mazda.
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