Car finance tips will help you choose the right car

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Car finance tips
3 years ago
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PAYING FOR YOUR CAR

When you consider buying a new car, you should decide if you are capable of paying for it. Otherwise, you will be forced to sacrifice other important household expenses just to pay monthly installment payments on your car loan.

Most people go around looking for the best car deals without thinking first about how to pay for the car. Before you go to your new car dealer, you should take a look at the financing options available for you. You should think whether to get an auto loan at the dealership or to get outside financing from banks and other lending firms.

As you look for the best financing options, you should take into consideration the peripheral costs such as insurance, taxes and fuel costs aside from the actual price of the car. For example, expensive cars like sports and luxury cars demand bigger insurance payments than utility cars. You should add these expenses to the possible monthly payments on your car before you get a loan and make a purchase.

There are several websites on the Internet that provide car finance tips to help you decide which financing options you can take. You can also avail of car loans through online lending firms such as E-LOAN.

Many people cannot afford to pay for the car in full, so getting auto loans from car dealers is a convenient option, albeit a more expensive one. Car dealers usually impose additional charges to your loan depending on your credit rating. If you have an excellent credit rating, you can avail of low interest rates and other special offers that can lower the costs of paying. But if your credit rating is poor, the car dealer may impose a higher interest rate on your loan.

Your credit rating is important if you decide to get an auto loan because most lending institutions will base the terms of your loan application on your credit score. There are many lending institutions that offer auto loans, including the usual banks and credit unions. Your car dealer can also arrange a loan through the manufacturer's financing arm, like GMAC for General Motors. You just choose the vehicle, fill up a credit application and then drive away with your brand-new car.

ALL ABOUT CAR INTEREST RATES

One of the factors that you should take into consideration in choosing an auto loan is the interest rate. You should look for the best auto loan rates so that you can minimize the costs of periodical payments on the loan.

Each and every credit facility has different interest rates. Compare the different loan offers from banks, credit unions and car financing arms and see which offer has the most competitive interest rates. If the car manufacturer offers a 2% rate, see if the bank or credit union can do better.

Aside from the interest rate, you should also consider the length of the loan and the required down payment amount. Your car dealer will ask you how long you wish to pay off the loan. Most auto loans are broken down to 36-60 monthly payments which lasts for 3-5 years. You decide how long you wish to pay off the loan depending on your financial capacity.

The longer it takes to finish paying off the loan, the lower your monthly payments. However, the interest rate and the down payment can also affect your monthly amortization. If the interest rate is too high, the purpose of having a small down payment and a longer time to pay is defeated.

CHOOSING THE CAR OF YOUR DREAMS

Which car should you buy? There are many factors that go into your choice of a new car. It could be convenience, luxury, cost or even the latest fad. If cost is your primary consideration, you should look for the most affordable car deals you can find without sacrificing quality.

It is advisable to do some research before you decide to buy a new car. Automotive publications such as the Automotive News and Consumer Reports will keep you updated on new car models available in the market.

You can also visit the various car manufacturer's websites and compare the different car models. A little research and comparison can save you several thousands of dollars before you step foot inside the car dealer showroom. It is also a good idea to visit the various car dealers near your place so that you can find the best possible deals.

Here's what you should consider in getting to know the car of your dreams:
- The actual price of the car versus the dealer's "sticker price"
- The car's equipment and accessories
- The possible maintenance and repair costs
- Peripheral costs such as insurance and taxes

If you are looking for the best possible deals, you might want to take a look at car models with lesser market demand. Dealers are usually willing to part with their slow-selling cars at reduced prices. But if you're more interested in the more popular and latest models, it's wise to purchase such a car when the buzz (and the demand) has died down a bit so that you can avail of the cheaper price.

READY TO BUY?

After you have done all your research and selection, it's time to visit the car dealer. Many car dealers are lenient enough to allow their customers to test-drive the cars they want to buy. You should be wary of car dealers who refuse to let customers test-drive their cars.

Test-driving the car you're interested in for several hours will allow you to check for possible defects or anything that you are not too happy with. It could be an uncomfortable seat or a defective engine. This is especially true for used or second-hand cars. Used car dealers understand this situation and are more than willing to offer you a test-drive.

Once you are happy with your chosen car, the car salesperson will probably ask you what financing options you have, whether you buy the car through an auto loan or to pay for it in full. You can also avail of outside financing sources to pay for the car, such as borrowing money from bank or lending firm, so that you can pay through cash or check.

Paying in cash or check can save you several hundreds or even thousands of dollars that would otherwise go to interest. Paying for the car outright eliminates the burden of interest rates and other inflated fees that are found in most auto loans, so you pay only for the actual price of the car.

Be sure to read the credit application (if you avail of an auto loan) and the sales agreement before you make the purchase. This important step will save you a lot of headaches later on and the possibility of a car dealer lawsuit if either party fails to abide with the agreement. You should always keep in mind that until you finish paying off the loan on your car, the car's title (as well as the legal rights) still belongs to the lending institution.

Purchasing your dream car is not as easy as going to the car dealership and choosing the car of your liking. If you are looking for the most affordable car deals, you should think and decide what financing options you opt to take. Car finance tips can help you make that important decision so that you can get the best quality car you can find at the lowest possible price.
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