Be Wise When Using A Personal Loan to Purchase a Car

Be Wise When Using A Personal Loan to Purchase a Car

Photo from Picasa

Photo from Picasa

Buying a new vehicle

Anyone looking to purchase a new car most likely is concerned with how to get a personal loan. In the past people were able to pay cash for car purchases, but due to the recession, now most people are in need of financial help. If you are looking to buy a vehicle, there are some rules of thumb to remember during the process. First of all, anyone looking to search for loans should start with a good budget. Knowing your financial situation is crucial when deciding on what price range you can afford. Start off with a basic assessment of your expenses versus your income. Remember to take into account insurance and car maintenance when coming up with your final numbers. You want to make a wise decision with what you can afford because it will dictate your payments for years to come.

Checking credit scores

Today’s world is all about credit. Anyone who has tried to get a loan knows how important the credit score can be. Don’t ignore your credit and then get the bad news when you are sitting across from a loan officer. Rather, do your own research. Pull up all three of your credit reports. A good rule of thumb is to request them six months prior to applying for a loan. Once you get your reports check the following items:

• Name, address, and aliases

• Each individual account

• Amounts owed and dates

• Judgments, if any

• Bankruptcy information

• Outdated information

You want to write to the credit bureaus and challenge any issues that are inaccurate, outdated or misleading.

Decide on new-versus-used purchases

The next decision to make is whether or not you want to buy a new or used car. A new car can be tempting, but remember that there is a reason why this country sells about three times as many used cars as new ones. People understand now more than ever that cars depreciate the minute they leave a lot. In today’s recession people are more discerning than ever and aren’t prone to throwing away unnecessary funds. In today’[s economy it’s best to not be tied to a large personal loan, but rather opt for a loan that fits into your budget. New cars inevitably come with higher price tags. Unless you have the funds to pay more, and lose more in depreciation, a good used car is the most advantageous option.

Pick the best car for your life

Finally, car buyers should consider what type of car they realistically need. For example, a car being purchased to drive children around needs to have ample room. On the other hand, a car for a senior citizen should be more focused towards economical choices. Other questions like “Who is the primary driver?” and “How many passengers will normally be driven around?” should also be addressed.

Buying a car wisely

In the end, buying a car is a big decision. Anyone in the market for a car should be wise with decision making. Especially in today’s economy, people need to be as cautious as ever regarding finances and that includes big-ticket item purchases. Most likely a personal loan will be needed to fund the cost, but minimizing it can save thousands in interest payments over the years of the contract.

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