If you save up a considerable amount of cash and make a big down payment, then you won’t have to take out as big of a loan and could be more likely to get approved. You could set aside a certain amount of money every month from your unemployment checks and other sources of income to save.
Consider buying a used car instead of a new one since it will be cheaper and more attainable. You could always look at the Kelley Blue Book to see prices of new and used vehicles, and when you go into the dealer, you can show them the Kelley Blue Book value to negotiate. For example, if they’re trying to sell you a used car that’s $3,000 above the Kelley Blue Book value, you could play hardball and tell them you won’t purchase it unless they lower the price.
Whether you’ve been furloughed due to the COVID-19 pandemic or just lost your job, these strategies can help you in your attempt to get a car loan. However, you’ll need to keep in mind that the terms of your car loan could potentially be less than desirable.
Since you’re unemployed, your lender may consider you a high-risk borrower, and your car loan agreement might not be ideal. For instance, the lender may want you to pay back your entire loan in a shorter amount of time, require you to set up automatic payments, give you a lower loan amount than you need or charge a higher interest rate and origination fees.
4. Save up Cash
You may be able to refinance your loan down the line once you get a new job and increase your credit score, which could bring your interest rates down and make your loan more affordable.
Getting Car Insurance When You’re Unemployed
You must purchase car insurance when you get a car. If you’re buying auto insurance while being furloughed or unemployed, you don’t have to worry about higher rates. Car insurance providers won’t look at employment, but they will look at factors like your age, driving record, location, car make and model and credit score to determine your monthly insurance premium.
To save money, you might want to purchase only the legally required liability car insurance amount required by your state. For example, in California, you’ll need to have at least $15,000 per person for bodily injury liability coverage, a $5,000 minimum for property damage liability coverage and $30,000 for injury or death of more than one person.
Since you’ll be making car payments, your lender will likely require you to carry collision and comprehensive insurance on the car. By raising your deductible, you can get a lower-priced policy. Your lender may encourage or require you to obtain GAP insurance, which will cover the cost of the difference between the value of the vehicle and the amount still owed on the loan in the event of an accident where the car is totaled.
Compare car insurance quotes to see which companies offer the best rates, as well as look into discounts by bundling your policy and signing up for autopay. When you speak to your potential car insurance provider, ask about any other company-specific discounts that could be applied.
If you do some research prior to going to the dealership, you could save yourself a lot of time, money and energy. Although you’re unemployed or furloughed right now and things are more difficult, you may just be able to get that car loan you need and the car insurance that’s best for you and move forward with your life.