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Originally Published: Oct 09, 2020 Last Updated: Oct 19, 2020 4 min read
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For many people, buying a car is a lot of fun. Others dread the experience entirely. But no matter how you feel about the process, before you dive into the new car market, take a deep breath—and take the time to learn from industry experts on how to get the most mileage from your new car budget.

Step One: Make Sure Your Credit Is In Good Shape

The amount you’re qualified to borrow will be based on a few different factors. Believe it or not, your income isn’t the primary factor lenders consider when they decide whether to give you a car loan. While there’s no official minimum credit score required for getting a car loan, experts recommend 650 or higher before applying for financing. Start by downloading a free copy of your credit report. If it’s less than stellar, there are plenty of ways to improve it. Improving your score isn’t an instantaneous process—it will take a few months. That’s why it makes sense to start working on your credit now, before you begin searching for a car loan.

If you notice mistakes on your credit report or your score is lower than 650, it may be worth reaching out to a credit repair company, like Credit Saint, who specializes in finding and disputing mistakes on your credit report and helping work towards increasing your credit score.

Step Two: Get a Handle on Other Car Expenses

Your monthly car payment is just one of the expenses you’ll have to budget for when you buy a new car. Don’t forget about auto insurance. Be sure to get a few insurance quotes to make sure that you’re paying a competitive price. If you’re a homeowner, ask about bundling your home and auto policies, which typically translates to around 20% in additional savings.

Another expense to budget for is the cost of repairing or replacing certain parts of your vehicle. A car warranty helps offset these costs and comes in handy if you're not prepared to pay the cost of these fixes, especially since car repairs can quickly add up to hundreds or thousands of dollars.

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Step Three: Get Pre-Qualified

Once you’ve ensured a strong credit score, you’re ready to get approved for a car loan. While some folks can pay cash for their new car, more than 85% of new cars are financed. It’s a good idea to get prequalified for a car loan by a bank or other lending institution, even before you hit the showrooms. That way, you’ll get an idea of how much you’ll be able to borrow and have realistic expectations when comparing car prices. It will also put you in a better negotiating position if you decide to explore financing from the dealer. The rate you pre-qualify for is the rate your dealer will have to beat. Car manufacturers want your financing business. That’s one more way they make money.

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The Bottom Line

Remember that when you buy a new car, you’re doing business with a salesperson who’s skilled at getting the highest price he can for his wares. The more information you have at your fingertips—including the invoice price on the car, available incentives, your financing options, and offers from other dealers—the better armed you’ll be for battle when it comes to negotiating a great price on the car you love.