Steps for Making a Big Purchase

December 9, 2023

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Medical students and residents may want or need to purchase a house, a car, or other expensive items before their education or training is complete. Indebtedness and limited salary may be concerns when thinking about this type of purchase; however, if you plan and approach the purchase wisely, many times the affordability concern can be mitigated, and the purchase may possibly be more affordable than originally imagined.

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young couple meeting real-estate agent to buy property, presentation tablet
Preparing to Buy

Step #1: Understand and Protect Your Credit Score Your FICO score (credit score) will determine the interest rate of your loan. A higher credit score often leads to a lower interest rate. If you need to increase your credit score, there are several actions to take, but keep in mind that raising your credit score may take some time, so plan accordingly.

To improve your credit score consider these actions:

  • Always pay bills on time.
  • Reduce the balance on your credit cards and other revolving debt.
  • Limit borrowing and avoid opening additional lines of credit.
  • Don't close accounts that have been open for a long time; they show your long-standing credit history.
  • Review your credit report for accuracy.

Note: You can review your free credit report from each of the credit bureaus at

Step #2: Know How Much You Can Afford Knowing what you can truly afford hinges on having a current, accurate and realistic budget. Once you determine a comfortable monthly payment that fits within your budget, then you can move on to the next step. 

The Buying Process

Step #3: Shop for a Loan – Yes, it seems backwards, but it makes most sense to shop for a loan before you shop for the item. By comparing lenders and their loan products, you will be able to find the best deal, and have a clear understanding of the total cost (fees, points, rates, etc.) associated with the big purchase. If a pre-approval letter is needed during your purchase, the lender can provide one.

Note: Limit shopping for a loan to a short span of time to avoid lowering your credit score due to several inquiries.

Step #4: Shop for your Big Purchase – Depending on the item, professional assistance may be required for this step. For a home purchase, a licensed real estate agent may be needed. For a car purchase, a trusted mechanic may be called upon to inspect your potential choice. Once you make your final selection, there may be negotiations, paperwork, additional inspections, or other items that need the attention of a professional. Often, the most stressful time comes at the tail end of the transaction.

Things to Avoid:

Don’t agree to a payment or product that makes you uncomfortable. Know your budget and understand the terms and conditions of the loan product.  If you don’t understand something, ask questions.

Other Tips:
  • When buying a car, consider a used car. As soon as you leave the dealership with a new car, it becomes a used car, and the value significantly decreases.
  • Reducing your monthly payments may increase your eligibility for a loan. A student loan forbearance may help you qualify for a more expensive house or car; however, when your forbearance ends, the house, car, and student loan bills will all need to be paid each month, so budget and spend accordingly.
  • Consider your future financial needs and wants. Be sure you have an emergency fund and take retirement savings and other financial responsibilities (like insurance, repairs, maintenance, etc.) into consideration before making the large purchase.
Other Resources

Buying a House: or
Buying a Car: or
Also check out the AAMC’s Financial Wellness Program

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