Tips on Getting the Best Auto Loan
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How many times have you heard someone say, "Wow, I got a great deal on my auto loan"? Rarely, if ever, right? People don't brag about their auto loans, usually they consider it similar to highway robbery. But there are some things that can help you get a much better deal, and give you something to brag about.
Before the Auto Loan
The best time to buy a car is the end of each month. If there are promotions for the salesmen, they are anxious to get sales, and will work with you to purchase the car you want, sometimes at insane prices, just to get the sale. Also, don't be in a hurry to buy. Look around; check online to see what the price and interest rates should be. Be patient.
Facing the Auto Loan Manager
You can negotiate your interest and payments, you don't have to take the first offer. Never tell them how much you can pay per month, because they will build an auto loan around that amount and you will lose your power to negotiate. Your interest and payments are based on your credit report (a history of your credit details) and your credit score (a number that tells how you rate against peers).
If you have good credit and a high score, you can drop a few percentage points off of the standard auto loan. There are special incentives sometimes with very low percentages that are worth taking advantage of, but make sure it is not a lease option or a high down payment.
Auto Loans Online
Auto loans offered at banks and websites often will have better interest rates. At lendingtree.com you submit your loan information and within 24 hours several companies will contact you with interest rates and payment options, all competing for your business. Sometimes they offer better rates than the dealer financing. If you have a loan with higher interest rates, refinancing online may save you money. Check with your bank or credit union as well to see if they can offer a competitive rate for members.
Finalizing the Auto Loan
When you go determine who you will borrow from, ask the following questions. What company is the auto loan with? What is the mailing address to send payments to. What happens if you default on your loan? Is there a grace period? Is there a prepayment penalty? What other expenses are included in the loan? What if your car is totaled or is repossessed? Who holds the title, you or the lender?
Budgeting Auto Loans
Using a simple budget, determine how much you will be able to spend, then make sure that you don't go higher when you settle on a loan. Increasing your down payment will help your payments decrease, as will getting a longer loan. You can go out 60 months to get a lower payment, but you will be paying more in interest, and it will take that much longer to own the car outright.
Posted by jonathan on February 25, 2005 at 01:04 AM