Homes and cars are usually the biggest purchases you’ll make in your life. The key to
buying smart is: Prepare, Prepare, Prepare.
Step 1: Check your credit
How much you eventually spend on your home or car will depend on your credit report and
score. Is your report accurate? Is your score where you want it to be?
Remember, it takes at least 60 days for a correction to come through on a credit report, and
even longer to improve a very low credit score—so it’s best to order your credit report and
score as soon as possible to give yourself time to make these changes. Visit
PurposeMoney.com to order your credit report with True Credit (for a fee).
Step 2: Save for the down payment
Home mortgages and many car loans will require a down payment of between 10% and
20% of the total purchase price. If you don’t have the savings for it now, go back to the
sections on savings and budgeting to see where you can begin setting aside money.
Step 3: Figure out how much you can afford
What you pay for a house or car will depend on the interest rate, the down payment, and
your income. You’ll need extra money for maintenance, service, fuel, insurance, taxes (in
some states) etc. So, before you buy, make sure you can afford all the costs that come with
a car or the house. For a house, you should set aside 5% of the home value for emergency
maintenance, and keep this money in a savings account you can access quickly. Go to the
“Tools and Resources” section of PurposeMoney.com for helpful calculators to help you
figure out how much you can afford.
Step 4: Shop smart for a loan
You wouldn’t buy the first car or house someone offers you, and you don’t have to settle for
the first loan you’re offered either!
Car loans: Many people finance their car through the dealer. This can be convenient,
but it doesn’t necessarily give you the best deal. Check your local bank and credit union
and online lenders for rates. You can even get pre-approved, so you can walk into the car
dealership with the loan already in hand.
● If you decide to use