Buying a car is a huge financial investment. Unlike a new Xbox or tickets to the next Beyonce concert, your decision to purchase a car will have lasting financial ramifications that can, at least in part, dictate your spending habits for the next couple of years. While things like car loans can help you lighten the financial load up front, it's possible and even common to get bogged down in the details of things like interest rates and how that affects how much you ultimately end up paying.
To loan or not to loan?
Before you sign on the dotted line, you should stop and consider if you even need to take out a car loan. Paying for a car with cash may seem like a daunting task, but if you're able to manage to pull the savings together, you'll be able to avoid the potential headache of wrestling with interest rates and monthly payments, not to mention avoiding these means you ultimately end up spending less. Additionally, Wall St. Cheat Sheet reported that buying with cash can help you avoid ending up with an upside-down loan – a situation where a car's depreciation means that you ultimately end up paying more than it's worth when it comes time to sell. However, saving up to buy a car in cold hard cash may not be feasible for everyone. If you've never been able to make friends with your piggy bank, then financing your purchase with a car loan may very well be the right choice for you.
Car loan ins and outs
If you decide to finance your car, there are a few things to keep in mind. First, your credit score may impact more than just your loan eligibility; it can also affect how much you end up paying per month. While having a poor credit score may not lock you out of qualifying for a loan, it can leave you with higher monthly payments. That said, according to CNN Money, consistently paying toward your car loan can raise your credit. If your credit score sees a decent jump during the course of your loan repayment, consider asking to refinance. This may afford you a better rate or cut down on the amount of time left in your repayment.
If you're looking to buy a car, head to NJ State Auto Auction. You'll find hundreds of Carfax-certified cars on the lot, and the in-house finance department is knowledgeable and dedicated to helping you qualify for a loan so you can afford the car, truck or van that's right for you.