If buying a new car is on your horizon, you would be wise to make sure you clean up your financial life as it appears on paper way before you ever head to the lot to start wheeling and dealing. You would also be wise to set a budget for your new car purchase well in advance too. You can find out just how much the car you want will cost you with valuation tools available at Cars.com. You can learn more about the critical aspect of car buying called financing and how your credit will ultimately affect how much you pay for your next car.
If you haven’t checked your credit report in a while, or if you’ve never seen it at all, do yourself a favor and find a place that allows you to have a free look at your report. If you carry a credit card, most credit card companies these days will let you see major elements of your report. And, if when you see your report you see what could be big red flags to lenders, start cleaning things up as fast as you can. Things that lenders don’t like include big chunks of credit used up on credit cards, or even worse if credit cards are maxed out. They also don’t like to see any charge offs, late payments, missed payments or other derogatory marks on your report like filing for bankruptcy. If you have any of these reported on your credit, you can have them corrected if they are truly errors, by contacting the creditor and advising them of the mistake. If they’re your fault, you’ll just have to live with the consequences of poor financial choices in the past.
You should aim to pay down credit card balances as fast as you can. The rule of thumb is to not charge more than 30 percent of the total credit available to you on any single card. Make all efforts to pay all of your bills on time every month leading up to your new car purchase. Don’t be tempted to apply for new credits cards at this time either. This will cause a hard inquiry on your report, and lenders don’t like to see too many of those at one time. Taking care of your financial housekeeping in advance of a big purchase like a car will positively impact the interest rate and terms you are eligible for on your purchase. It will benefit you the day of the sale, and for the long term.