Arrange a Personal Car Loan in 5 Steps

There’s no reason to feel uncertain when applying for a personal car loan. 75% of all car purchases today require financing in order for the deal to complete. Financial institutes try to make the process as quick and smooth as possible. Follow these 5 steps to obtain your personal car loan.

Step 1. Personal Car Loan: Determine Your Finances

How do you figure out what you can afford? Start with a monthly budget. Add up all your income sources. Then add up all your fixed monthly expenses, as well as an estimate of other expenses such as gas or entertainment. Subtract your expenses from your income. What’s left over, is how much you can spend on a personal car loan.

Step 2. Personal Car Loan: What You Can Afford vs What You Qualify For

What you can afford and what you can qualify for are often two different numbers so don’t be surprised. Loans officers will allow 20% of your take home pay towards a personal car loan. This means this number can be a lot higher than what you determined you can afford.

Armed with the information about what you can really afford, you can ensure you don’t go over what your budget allows, and you won’t blindly sign onto a personal car loan that could create a stressful situation.

Step 3. Personal Car Loan: What Do You Want to Drive?

You know what you can qualify for, what you can afford, and now you need to decide what it is you should drive. There are all kinds of vehicles on the market at many different price points so finding a vehicle you can afford isn’t the issue. Finding the right vehicle is what’s important. You know your needs best so start by making a list.

For example, do you spend a lot of time hunting; maybe you have a young family; perhaps you are looking for a vehicle that can haul a trailer; or maybe gas mileage is important. Make the list. Then you can determine what the right type of vehicle for you.

Step 4. Personal Car Loan: It’s Time for Your Homework

Now that you know what type of vehicle you should be looking for it’s time to start to do some homework. Find vehicles that are the right type and in your budget, then begin to read reviews, consumer reports, and learn what they have to offer and where their weaknesses are. Learn what the warranty is, what options are available, and everything you can about those vehicles, to help you make the final choice.

Step 5. Personal Car Loan: How Much Down?

How much of a down payment you need will depend on the lender, your personal credit score, and how much the vehicle is. You may not even require a down payment. Even when not necessary a down payment is a good idea, as it will lower your car payment. Take advantage of any rebates or trade in offers.

That’s it. All that’s left is to choose your car off the lot and sign the personal car loan documents.

 


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