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How to Finance a Vehicle | Bakersfield, CA
Vehicle financing has become increasingly popular in recent years, with virtually all of new and used car buyers opting to borrow money instead of paying up front. That may be because the average cost for a vehicle is $17,000 for used models and up to $31,000 for a new one. Understanding all of your financing options might save you thousands in the long run.
The first step in the financing process is understanding how much you can spend. This is largely determined by your credit score, a rating from 300 to 850 that is calculated by organizations like Experian, TransUnion, and Equifax. Credit scores reflect factors like payment history, types of credit, the length of your credit history, and the number of credit inquiries you have had. Late payments are the worst thing for your credit score.
Create a Monthly Spending Plan
You should also understand your debt-to-income ratio, or DTI, a number determined by the amount you owe versus the money you make. You should ideally have less than 20 percent of your income in debt—anymore and you might not be appealing to financial institutes.
In order to understand how much you should spend on a new car, try making a monthly spending plan. You should consider how much you spend on the following:
Subtract the total expenses from your monthly take-home pay. If you have money left over, you can spend that on your new car.
Know What to Bring
You can borrow from a bank, called Direct Lending, or a dealership; however, you will need certain information before you can get financed. This includes basics like your name, DOB, and address, but you will also have to disclose sensitive information like the following:
Social Security Number
Sources of Income
Total Gross Monthly Income
Financial Info (debt and other credit accounts)
Make sure to be honest with your creditors and the dealership finance team. Here at Bakersfield Mazda, our team of financial experts can get you the best rates around. Stop by today to get behind the wheel of your new car.