The smart way to buy your next used or pre-owned car

The latest industry data shows that used car prices are slowly beginning to fall as more used cars enter the market after a few years of low supply. The average amount borrowed to purchase a used car is currently about $18,000. Figuring out how much you can afford without breaking the bank is important.

The first thing you need to consider is all of your other expenses that make up your monthly budget. Your debt to income ratio shouldn’t be higher than 36 percent, which includes your mortgage, student loans, credit cards and more. Banks only offer the best rates to those with favorable debt amounts, so waiting to pay off a few more things can be very beneficial.

When applying for a loan, make sure you know what your credit score is. If it is lower than 720, you will more than likely not get the lowest rate available. There are a number of places where you can check your credit report and score online for a small fee. Make sure to shop around at different lenders to get the best APR and a reasonable loan term. You don’t want to be paying for a used car 6 or 7 years down the line with a high interest rate.

Coming up with a larger down payment will also help you get a better rate on your next car purchase, and allow you to lower your payments and loan term length. A down payment of at least 20 percent is recommended for any car purchase. Also, purchasing an Enterprise Car Sales certified vehicle that is only a year or two old will significantly lower the depreciation amount, and provide you with a car that is still under warranty.

Source:
http://www.mainstreet.com/