In the modern world, it is very easy to take credit. However, many forget that this obligation, which, in the case of negligence, can lead the borrower to a large financial debt. Auto credit is no exception – it is important to plan properly. We offer you a few tips that will help avoid serious consequences.
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Choose a car
First of all, you need to understand how much money you need and for what model. If you are not sure of your choice, try first to rent a car that you are interested in. To make this profitable, look through prices on the Internet. For example, search for Cadillac car price in UAE. The cost of different rental companies can differ significantly. But, as a rule, you can count on good service and a wide range of cars to rent. Believe me, hiring an automobile to understand what it’s in use, it’s cheaper than buying.
Also, before you loan money for the car, please note that some lenders:
– do not loan to certain brands or types of cars;
– want you to make a purchase through a specific dealer network;
– may be against buying a car from an individual seller;
– can set time limits. For example, a month to use the loan.
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Check your credit history
If you’ve had trouble repaying your loans in the past, and your current income is not particularly high, you can hardly expect to borrow a large amount at a low-interest rate.
If you have a bad credit history (lower 700 scores), it might make sense to postpone the purchase for six months or a year to try to improve your credit history.
Check out the average interest rates on car loans for people with your credit score to see how much you will have to pay.
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Check creditor’s terms
It is time to familiarize yourself with the criteria for car loans. Them can offer:
– large national banks;
– local banks;
– credit unions;
– Internet lenders;
– dealers.
A bank in which you have an account or a credit union can offer you a preferential rate. Especially if you will agree to automatic payments from your current account.
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Choose the best offer
Ask for interest rate quotes from the lenders you most like. Then compare offers. Interest rates can differ widely, as companies have different assessments of credit histories.
With the answer, you will be able to understand how much you can expect and the likely interest rate.
Try to minimize the term of the car loan, because it means that you will pay more interest. In addition, banks often set higher interest rates for longer loans, automatically increasing them.
Do not buy zero-interest loans. Because the more you make the first installment, the less interest will have to pay. It is advisable to have at least 20% of your own funds from the cost of the car.
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Set your budget
In the preliminary offers, you will see the maximum amount of the loan. But this does not mean that you can use all of it to buy a car. You still need to subtract 10% from it to cover taxes and fees. You can use an online calculator to calculate a car loan. If monthly payments are too large for you, you can always borrow less.
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Check the contract
Before signing the contract, make sure that there are no pitfalls:
– in addition to the cost of the car, you may have to pay sales tax, registration, and paperwork fees;
– additional services that can be obtained elsewhere cheaper;
– no penalty for early repayment.
What did we learn?
