Car Loans – Financing
When choosing a lending agency for borrowing money to buy your car, you should obtain quotes from several different agencies Shop at credit unions or even your local bank.
Most dealerships offer car loans through the Manufacturer, but you should not automatically choose this plan as you might be paying a much higher interest rate. However, if you have excellent credit, then you might want to take advantage of low or no interest financing. Generally speaking, the low or zero interest financing loans are offered for slower moving inventory. But again, if you have good credit and like the model being offered at a good rate, it’s a great deal.
Try AutoFinder.com financing partner Auto Credit Express and compare to the other quotes you are getting especially if you have no or not so good credit. Your interest rate is calculated by a number of factors but most importantly your credit score, If you have blemishes on your report, you can still finance but of course the interest rate will be higher. Even so, please shop around because lenders are eager for your business. Please do not be taken advantage of either.. Be patient and get the best deal that fits into your budget.
When given the option of a three-year or six-year loan, it is tempting to choose the longer loan since your payments will be less. However, if possible, choose the lesser time, which will save you a lot more money in the end based on interest. In addition, investigate if there are any penalties for paying your loan off early.
If you are buying a new car, and plan on keeping it a long time then maybe it makes sense for you to go with the longer term. Make sure you know how much more that will cost over the life of the loan and then decide if it’s worth going for a longer term. If the lower payment is appealing and important for your budget, then longer term makes sense. But again, ONLY if you plan on keeping the vehicle for a long time.
The dealer will try to push the longer term financing in order to make more money from you however it may not be your best interest. Most people will trade-in their vehicle much earlier than 6 years. Remember to be pre-approved before walking into the dealer. This gives you much more control of the buying process and less chance you will be taken advantage of.
If you do not understand anything on the contract, contact an attorney to help clarify anything before signing. Moreover, never feel embarrassed by double-checking figures to ensure everything adds up to what you agreed to pay.
Your best option is to get pre-approved. Common practice is for the lending agency to provide the buyer with a check not to exceed the approved amount. This is a great safety net in that you cannot be talked into buying a more expensive vehicle.
Most importantly figure what vehicle you can comfortably afford. After discussing it with a lender, you will be able to determine your level of comfort. If you find that the payment is too much, shop around for another type of vehicle or consider a used one. There are plenty of great used cars which are almost new and carry a warranty. Just do your diligence and know the value of the type of car you are looking for. You could save thousands by having this knowledge and find a great pre-owned car that looks brand new. People buy on emotions, take a step back and be smart, do not buy purely on your excitment of owning a particular vehicle if you can not comfortably pay the monthly payment. In the long run , you will be much happier that you decided to get a nice car that you can afford and be proud of.