Buying a new luxury car is similar to any other type of new vehicle, with some slight differences. The types of financing you can get and what you need to provide the lender or dealership to be approved is a little different than for a vehicle that costs a little less. Here are some tips for being approved for luxury car financing.
Put Down As Much Cash As Possible
With a luxury vehicle, it is going to have a higher sale value, therefore you will need a higher down payment. Try to come up with as much cash as possible for the down payment, even going beyond the minimum percentage that dealerships often look for. If you can put more down, it helps you become qualified even if you don't have the best credit. This also ensures your total amount due and monthly payments are a little lower. Some dealerships are willing to lower the interest rate when you put down a large down payment, which can also help you save money.
Get Your Credit Squared Away First
If you are financing the car instead of paying cash, you need to have a good credit rating. Your credit shows that you pay your bills on time and have a solid history of paying for your credit cards and other lines of credit. If this will be your very first line of credit, you might have a little more difficulty. Request your credit report and look for any items that might be fraudulent or collections that should no longer be listed on the report. Contact the credit bureau and try to get these removed before you apply for financing. Also try to raise your score as much as you can by paying your current bills on time.
Speak to Your Lender First
While you may end up going through the dealership's financing office, it is a good idea to find a loan on your own for a luxury car. With an expensive vehicle, you can often get a lower interest rate by looking for your own lender. If you belong to a credit union, that is a great place to start. Your own financial institution knows you, how much you earn, your spending activity, and how much you have saved. They might be more willing to give you a loan for a luxury vehicle as opposed to a dealership that doesn't know what your financial situation is.
Consider Getting a Luxury Car Lease
Don't forget about the option of leasing the luxury car instead of buying it. This allows you to try out the car for a few years and possibly pay lower monthly payments. It is a good idea if your low credit requires you to pay higher interest and higher monthly payments just for approval.