Become an expert: all you need to know to cut your car-related costs

Buying a car is a financial goal many people have, buy there are a lot of costs that come with it that you need to be aware of. Here’s everything you need to know.

If you're thinking about buying a used vehicle, you may have neglected to dedicate as much time as you did to the research of models and dealerships to the details of your financing arrangement. Here are some tips to help you.

The wrong loan can cost you a lot of money over the long run, so read on to learn how to make sure you get your money's worth.

1. Shop Around Before You Buy

It's a good idea to get a least three or four quotes before you settle on a lender. Going through the dealership is often the most convenient route, and sometimes they can offer excellent rates, but they may not be the best deal. 

2. Know what your credit looks like

Dealerships often advertise their low-interest rates for pre-owned cars but the fine print makes it clear that those rates are only for qualified borrowers. Knowing your credit score can help you determine whether you might qualify. 

3. Consider a co-signer

If you're young and have no credit or if you have made a few credit mistakes, it's worth seeing if someone is willing to co-sign your loan. Lenders are hesitant to finance cars for people they perceive as high-risk, so even if you qualify, you're likely to pay high-interest rates that make your car significantly more expensive in the long run.

4. Look for non-recourse loans

You probably already know that the lender can repossess your car if you default on a car loan, but what most people don't realize is that some loans also let them sue you for the balance of the loan if your car isn't worth enough to cover it. Non-recourse loans only allow the lender to repossess the vehicle, even if it isn't worth as much as the loan balance. If you can't qualify for a non-recourse loan, be sure to get gap insurance to cover the difference between your car's actual value and how much you owe on it

5. Don't be tempted by low payments

Seeing that low monthly payment might initially seem like a good thing, but low payments usually mean you'll be paying off your loan for a long time and will be spending a lot of money in interests. It's usually a better idea to select a higher monthly payment that gets your car paid off faster. 

6. Put as much down payment as possible

Remember that you'll be paying interest on the loan, so don’t be tempted by low or no initial down payment if you can avoid it. Most experts recommend putting at least 20 percent of the car's total purchase price as a down payment. If you're able to spend more than that, that's even better. 

7. Don't roll fees and extras into the loan

Whether you buy a new or pre-owned car, the purchase price is only part of the story. You also have to pay for sales tax, registration fees, and optional items such as warranties. While most lenders are willing to roll those costs into your loan, it's generally a better idea to pay them with cash. 

8. Pay on time

Most car loans pack on expensive fees and penalties if you forget your payments or make a late payment. Chronic late payments can even cause your interest rate to increase, so make sure your payments are made every month without a hitch.

Auto-loans refinancing: doest it help or does it hurt?

If you're wondering whether to refinance your auto loan or not, it helps to know how the pros and cons of this move. 

Auto lenders have started offering longer car loans so that consumers can borrow more with a lower monthly payment, to make up for the rising cost of new and used cars. But borrowing too much or extending your repayment timeline can make you wish you had a different auto loan

So read on to learn the advantages and disadvantages, and then make a careful decision. 

Advantages

You could obtain a lower monthly payment

It's possible refinancing your car loan could secure a lower monthly payment that might make it easier to stay on top of your living expenses and other bills.

You could get a much lower interest rate

By refinancing, you might be able to qualify for a lower interest rate, which could save you a lot of money over the life of your loan. 

Tap into any equity you have

Refinancing your auto loan can also help you tap into any equity you have in your car. This can be of great help if you need money for emergencies or want to consolidate debt at a lower interest rate.

Disadvantages

You might extend your repayment timeline

Paying less each month is of great help if you are in debt, but remember that this will mean paying for more time, which can create unintended financial consequences later on. 

You may pay more interest over the life of your loan

Before you refinance your auto loan, make sure you run the numbers with an auto loan calculator to compare total interest costs. By paying less each month or securing lower rates today, you may wind up paying more interest on your loan due to a lengthier timeline.

Refinancing comes with fees

Finally, don't forget that refinancing your car loan isn’t free. Fees for doing so can include an application fee, an origination fee, and an auto lien transfer fee, and you may even be charged prepayment penalties that will come into play if you refinance your loan. 

Conclusion

Paying lower interests or monthly payments sounds like a great thing, but we’ve already gone over the consequences of doing it, so make sure you run the numbers before you move forward.

Insurance: what things affect your rate?

Car insurance rates can be a lot of things, but they are definitely not an exact science. There are a lot of factors that affect the final rate, so it is really important to shop around.

Car insurance rates are affected by a lot of factors. Some of them we can control and some of them we can’t. Things like gender, age and driving record play an important part when it comes to determining your rate. But there are lesser-known factors that affect your premium:

1-    The kind of car you drive

Sure, you can imagine that if you drive an expensive car, you can expect your insurance to be more expensive. But that’s not the only thing they take into account. Your insurance rate is also calculated based on the safety rating of your vehicle, its size and age, and the likelihood that it might be stolen.
This is why it is such a good idea to get insurance quotes before you make your final decision on a car.

2-    Poor credit

Car insurance companies use some of your personal and basic information to calculate your rate, so they are basically keeping an eye on you. The most common factor that they use to calculate your premium is your credit score: the lower it is, the more you will pay.
But the good thing is that credit score, unlike age or gender, is something you can control.

3-    Marital status

A lot of insurers consider your marital status when calculating your rate. Some insurers believe that married drivers are more responsible than single ones, so the rates might be lower.

4-    Homeowner status

Being a homeowner can have a positive impact on your car insurance rate. Insurance companies believe that if you managed to buy a house, you are financially stable and, as a consequence, they trust you more and reward you with lower rates.

5-    How and where you drive

Your driving record affects your insurance rate, we all know that. But there are some other factors that might play a part, too.
For example, the distance of your commute might affect your premium, because if you are on the road longer, your risk is higher.

Where you live and drive is also considered an important factor. Insurance companies will take into account vandalism records in your area, the number of claims and fraudulent claims, cases of vehicle theft, etc.

Last words: how to buy a cheap car

Scotty Kilmer is a well-known American YouTube personality: He tells us 5 secrets to buy a cheap car

About his video:
"Buying a cheap used car. 5 Secrets to Buying a Cheap Used Car, DIY car inspection and car review with Scotty Kilmer. How to inspect a used car for purchase. How to buy a car. How to buy a used car. What to look for when buying a used car. How to buy a cheap used car. The best cheap used cars to buy. Car Advice. DIY car repair with Scotty Kilmer, an auto mechanic for the last 51 years."
If you liked this video and want to see more, here is his YouTube channel.
    
 

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