If you’re not making enough money right now to even consider buying a new car, then it’s probably not smart to buy one no matter the offers they throw at you, but on the other hand, recessive times means that now is one of the best times in years to find a great new car deal if you personally aren’t affected by the recession. Having extra cash at the end of each month, having a stable income for the foreseeable future, and a cosigner if your credit isn’t too great, are the steps to consider”” then you may be ready to put yourself in a new car or truck.
Financing a new car requires money, and spending cash wisely should be your biggest concern. For one, online loan rates can be lower than what a dealership would give you if you simply walked in. During any car loan application process, you should always honestly and correctly answer every question regarding your financial history (falsely stated facts will only come back to haunt you when they run your credit history, which they will). Also, walking into your bank or credit union for a car loan quote is never a bad idea, and you’ll most certainly walk away with a great preapproved loan you can show dealerships. Never arrive at the dealer without a no-obligation quote/ preapproved car loan””either from an in-person or online source, say the experts.
Having your own loan could save you significant money. Example, a 60 month $28,000 loan at 4.49% could save one as much as $2,700 over the loan’s lifetime, compared to a car loan at 7.75%
The price paid for borrowing via an auto loan is of course mostly found in the interest rate. Your interest rate percentage and loan cost will be solely dependent on your on your credit history and the new car you choose. Those with awesome credit histories will receive the best prime rates available (this is rare), but of course not everyone has a high FICO score leaving these less fortunate with higher rates.
Zero-percent interest rates are rare these days but can still be found. Don’t be bothered if you don’t see them. Today, most people wouldn’t even accept a car loan with more than 8 percent total interest, but those with damaged credit may be forced to cough up 20 percent. Many dealers often offer a choice between zero-percent financing or a rebate””but not both. A zero-percent car loan doesn’t always save you the most money, however. In fact, sometimes it’s a better to receive a cash rebate and use that towards your desired car’s purchase price””and then use your better preapproved loan for financing. Always negotiate the length of your loan, amount of the interest rate, terms and conditions, prepayment penalties, and due dates. Remember to look at is as the total cost over time you will incur.
Most auto loan lenders require an upfront down payment; however some also offer 0 down signing. Having a large up-front down payment (think 20%) should automatically get you a great rate, but not always. Shorter auto loans usually boast low rates with high monthly payments, while long-term loans require higher rates but lower monthly payments.
If your auto loan application is rejected don’t be upset. There are lenders out there willing to qualify even those with hardly any credit, but in the end you’ll have to pay via a hefty interest rate.
And finally, don’t think that you shouldn’t visit the dealer for a quote””after all, you never know if that’s where the best rate is hiding. Often times, the manufacturer’s new car finance rates are the lowest available (keep in mind that dealerships are more likely to accommodate your financial needs, because they have a car to sell you too, not just a loan). Finally, taking a loan with a high interest rate leaves you with no choice but to stay on top of your credit and be timely with all payments, or else you’ll just dig yourself deeper into a financial hole. Do it right though, and you’re set to come out much better than you are now. Remember that you’ll more than likely be able to refinance your high interest rate loan in a few years just as long as you pay everything in full and on-time. Investigating an auto loan lender is always a great idea too if they’re small and you’re not familiar with them. The Better Business Bureau, your state’s Attorney General’s office, or Consumer Affairs office should have information about your lender. There’s always a great and cheap car loan out there somewhere, and if you take your time and do your auto loan homework, then searching for the right lender shouldn’t be a problem.