Apart from homes, automobiles are among some of the most expensive purchases that American consumers make. Given the high price tag that can come with a new or used vehicle, many buyers will finance the purchase with a car loan. The good news is that, if you create a smart car-buying strategy, you can get a high-quality vehicle without having to pay more than necessary. To help you save on your next vehicle purchase, here are a few financing dos and don’ts to keep in mind before you buy.

Do:

Get pre-approved by a bank.

Go to your bank and apply for a car loan to see how much you can qualify for and how low your interest rates can be. This information can be useful when negotiating with a dealership, as they will often try to convince you to apply for a loan through them. If the dealer’s financing options aren’t as attractive, go with the offer given to you by your bank.

Build a sizeable down payment.

The larger your down payment is, the lower your monthly loan payments will be. If you’re not in dire need of a new vehicle, take time to bulk up your savings account. Ideally, you should aim for a down payment that’s 20% of the purchase price or higher.

Look at the long-term picture.

Low monthly payments may seem attractive at first, but the long-term costs can be steep when you spread these payments out over extended periods and combine them with high interest rates. To save thousands in unnecessary expenses, stick to shorter terms that require slightly higher monthly payments.  

Don’t:

Shop before you know your budget.

You shouldn’t decide on a model until you know what your financing will look like. After you get pre-approved for a car loan from your bank, you’ll have a better sense of your budget and be able to keep your vehicle search within that price range.

Overlook used vehicles.

New cars can be incredibly expensive and depreciate at high rates. Pre-owned vehicles, on the other hand, enjoy a slower rate of depreciation and can cost much less to finance. If you buy a used car from a trusted dealer with a warranty, it should run just as reliably as its newer counterparts.

Finance add-ons.

Dealers will often try to upsell customers on flashy add-ons, such as in-seat screens and tinted windows. While these features may be helpful, financing them can be a waste of money. To play it safe, only finance the vehicle and look into enhancements later on when you can pay for them out-of-pocket.

Whether you need a bigger car for a growing family or a dependable ride for your daily work commute, The Missouri Bank offers financing to get you behind-the-wheel. Providing personalized service for every client, this Wentzville, MO, bank will guide you through the car loan application process so you can get the best terms and more flexible purchase options. Beyond auto financing, this team can also help you explore other solutions for major purchases in life, including business and mortgage loans. To learn more about their banking services, visit this trusted institution online or call (636) 327-4900.