Special Finance – Making the Most of Your New Auto Loan

It’s time to trade in that time-honored old vehicle for something newer. Perhaps you’ve outgrown the vehicle with new family additions, or perhaps you simply need something more reliable. Regardless of the reason, you now find yourself in need of a new vehicle. Before you even step foot on a dealership, you’ll need to determine how you want to pay for the new vehicle. Three options are available for you to use; buy, lease or finance.

Buying a car outright is the most affordable way to get a new vehicle. However, most consumers simply don’t have the cash up front to do this. Leasing is a popular option, but it actually becomes more expensive over time than most consumers would like. That leaves auto financing. This is the most common way to purchase a new car, today.

Auto financing offers you more than one option. The most common way to finance your new car is through the dealership. However, being well armed before heading to the dealership is important. The first thing that you should do is get copy of your credit report. You can do this free, once each year. Some states will allow you to have an additional copy per year, as well. Viewing your credit report beforehand will help you avoid expensive surprises when you get to the dealership.

Once you know how your credit stands, you’ll need to define your budget. This includes how much you can afford as a down payment, as well as what you can afford in monthly payments. As a general rule, your car payment should not be more than 20% of your monthly income. However, the amount that you put down on the car, combined with the interest rate that you receive, will dictate just how expensive those monthly payments are. Use an online auto loan calculator to help you determine just how much you can afford.

Now that you know how much you can afford, you are ready to get that loan. You can do that before heading to the dealership, as well. Some dealerships inflate the interest rate on car loans, in order to gain more profit. However, you can get a loan from a different source and save money, in many cases. Credit unions, your local bank and online lenders can all offer you a viable alternative to dealership financing. Take your time and sort through your options before making a choice. Choosing the first option that presents itself may cost you more in the end.

If you do decide that you want to finance through the dealership, you’ll need to be on your toes. Remember, just because the salesperson says one thing on the lot, it doesn’t mean that it will be that way in your contract. Ensure that you read the contract thoroughly. In addition, knowing your auto financing information will help you ensure that you get the right interest rate from the dealer F&I officer. If you feel that you are being “taken for a ride” do not hesitate to leave. Your wallet will thank you in the end.

» Tags: , , , , , , , , , , , , ,

Comments are closed.