New Mazda buyers have all sorts of questions, one of which is usually about car financing. Most of us can’t afford to pay for a brand new car without a loan, so understanding how to finance your new Mazda before you even step onto the lot is important to make sure you get the best deal possible.
Step 1: Know Your Credit Score
Even if you have poor credit, you’ll probably be able to get a loan for your new car. This is because lenders consider cars a fairly safe risk because if you default on the loan, they can repossess the vehicle. However, you’ll pay a much higher interest rate if your credit isn’t good. Understanding your credit score before you start the financing process, whether through the dealership or another lender, can help you shop around for a decent interest rate.
Step 2: Get Prequalified
The best way to avoid overspending on a car is to get prequalified for a loan before you even start shopping. This way, you’ll know your interest rate and the maximum amount you can spend on a vehicle, which can keep you within your budget. It also allows you to be more confident when you’re shopping because you know you’ve already secured financing. There won’t be any anxious wait while your credit is checked.
Step 3: Keep the Loan Term in Mind
Rather than looking at the amount of your monthly payments for your new car, look at the overall price. Car buyers often fall into the trap of paying more attention to how much they’ll be spending monthly rather than how much they are actually paying overtime. Of course, the longer the term is, the lower your monthly payments will be, but with interest, you could actually be paying quite a bit more for the vehicle.
Step 4: Put As Much Money Down As Possible
The more money you can afford to put down on your vehicle’s loan, the better off you’ll be in the long run because you won’t pay interest on the down payment. Aim for a down payment of 20% of the purchase price, which will not only lower the overall amount you’re financing but will allow you to pay the vehicle off sooner and avoid a situation where you owe more than the vehicle is worth when accounting for depreciation.
Step 5: Pay Fees and Taxes With Cash
The dealership fee, registration fees, and taxes do not increase the value of your vehicle, so it’s in your best interest to pay for these items in cash rather than rolling them into your loan. When you include these fees in your loan, you’re going to owe more than your car is worth, at least for the first part of your term. Even if you were to sell it right away, you wouldn’t get enough to cover the loan.
You have a variety of choices available when you go to pay for your new Mazda, but often, the dealership offers the best financing option for your needs. Contact Flood Mazda today to see just how affordable a new Mazda can be.
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