Buying a car is a major investment and should not be taken lightly, especially if you are buying a car together as a married couple. Both spouses will need to take their personal financial situation into consideration when looking at buying a car as a couple, as a credit check for a joint loan can make or break an application. Below is some advice outlining what you should do if you are interested in buying a car as a married couple.
Do your research
Before you fill in any application forms, you will need to do your research. You should use an online car calculator to calculate your affordability and remember to consider aspects such as who will be using the car more often and how much mileage each spouse expects to put on the car.
If you are considering starting a family in the near future, you will need to factor this into your choice. Look for models that are able to cater for families, such an SUV or a 4×4, rather than settling for a smaller town car to begin with. Even if only one spouse will be doing the driving, you will both need to be aware of the options because you will both be financially responsible for the vehicle.
Consider both credit histories
If only one of you has a good credit rating, then it might be advisable to look into a solo loan application, rather than a joint loan application. You may feel that this is unfair on your partner, as they will be contributing to the monthly repayments, but the lower a credit score, the higher the interest rates will climb.
A bad credit score will also pull a good one down, making it difficult to apply for other loans. This is a touchy subject with many people, so be sure to approach your partner in a positive manner, rather than with the intent to blame or shame them for having a negative credit score. If it is not financially viable for you to apply for a solo loan, then be prepared to explain bad credit ratings to your bank, as they will likely want to know about any discrepancies on your score.
Draw up a budget
This is a highly important step in any loan application process, and should not be approached likely by either party. Even with two incomes, a regular car repayment can take a significant chunk out of the monthly budget.
Your budget should include petrol costs as well as maintenance expenses, including a small savings amount for unforeseen car emergencies. You should both agree on an amount, as this will make the loan application easier and more efficient. Having a budget in mind will also help your bank by allowing them to decide on the amount they are willing to loan you, and if your loan is a viable venture for them to continue with.
Don’t forget car insurance
Car insurance is often forgotten about or left until the last minute with first-time buyers, but this should be one of the first items on your list when crafting the budget for your car. A joint policy will allow both you and your spouse to drive the car legally, and will cover both of you should there be an accident.
A poor driving record from either you or your spouse may cancel out any benefits you may have received from your joint policy, so be sure to discuss your driving history with each other before either of you applies for insurance. As a married couple, it is easier to apply for a joint policy, as you will both be able to drive the car which is highly useful in times of emergency. Speak to your car dealership about what options are available to you.
Be sure that you are ready
It is vital to ensure that you are both ready, emotionally and financially, to make such a large investment. If your spouse is unsure about a joint loan or feels as though their salary does not amount to enough to make monthly contributions, you will need to take this into consideration.
If neither of you are in good financial shape, then it may be best to forego purchasing a car at this time. For those who have a car that needs replacing but it is not an emergency, you and your spouse could work on improving your credit before making any car purchase decisions. Bad loan terms can lead to missed payments, which can wreak havoc on your credit score for later loans and purchases.
You will need to be mentally and emotionally prepared as an individual and as a couple, which means speaking openly with each other about your financial situation. Be sure to draw up a realistic budget together and decide on what type of loan you would like to take out. Working together as a married couple is vital for any successful loan application.