Getting auto loans or car loans are critical for meeting the transportation needs of people. To get from work to home and from point A to point B, you need a car, if public transportation is not feasible.
Unfortunately, most auto buyers treat car financing as an afterthought during the car buying process.
The following tips are on auto loans, on what to do and what to stay away from.
Be Aware of Your Incentives
There are numerous auto web sites that provide up-to-date information relating to automobiles. You can research available low-interest or even zero-percent auto financing deals you might qualify for.
Even bad credit auto loan financing is possible with different rates. For example, good credit may qualify for zero-percent car financing as an incentive for some auto buyers.
Be Prepared Before Buying
Auto financing should be well prepared ahead of time by going to a bank or credit union. Car financing in advance of a car purchase can give you choice at the financing table of the car dealer. GM, Ford, Toyota, and other car companies offer “captive financing terms” through their credit financing arms. However, if you have been pre-approved for lower interest rate loans you can negotiate with the car dealer from a position of strength.
Car dealers will bump up the finance interest if they don’t make that much money on the car sale. Remember, the car dealership gets a portion of that interest of any loan financed through them. Herein, if you don’t inform the car dealer that you have prior auto financing in place during car price negotiations, when the time comes to discuss the financing, you have the leverage. Then if they try to play games during with their finance offer, you can refuse their offer and implement you own pre-approved car financing.
In this manner, competition between lenders with the best financing options will prevail. Hence, pre-financing gives you negotiation leverage and control.
Stay Within Your Means
Before you start your car buying journey, know how much car you can afford. You can use financial calculators to determine how much car your personal finance will permit you to own.
By knowing the affordability range, you know how much of a down payment to make and how much your monthly payments will be.