Car Finance Advice
Summary: Unless you have a bottomless pit of money, you will probably need to look at financing your new or used car purchase. We will look at the options available to you, and even do some basic math. Learning the basics of auto financing can save you thousands of dollars over the life of your loan.
How to finance your car purchase...
As if you didn't have enough trouble finding the car of your dreams now you have to figure out how to pay for it. No doubt you see the low monthly payments offered in the paper. I bet you also had to squint to realize that was a lease price. Be aware of all the low to zero interest rates advertised, they often are only valid for customers with perfect credit. Making sure your Credit is in tip-top shape will help you qualify for these low interest rates.
Decide where you will finance: It's convenient to finance through the dealer but many times you are not getting the best interest rate.
Consider the following sources:
- Credit Unions: If you belong to one, you can usually get much lower interest rates. Credit Unions are there to serve you, not themselves.
- Online Lenders: With lower overhead, online lenders can offer you better rates than a dealer. I recommend using Dealix.com for your online lending needs. They shop your application to numerous online lenders and find you the best rates.
Also you need to consider...
- Check the fine print: Make sure you will not be penalized for paying off the loan early or for auto refinancing. Also check the minimum collision coverage required. If you are used to carrying a $1000 deductible and the lender requires a $500 deductible, you could be in for a surprise when the bill shows up.
- If you decide to go to the dealer to arrange the financing, request to see the approval letter from the lending institution. Dealers can mark up the interest rates and earn commission by doing this little trick.
- Before signing: Check the fine print ! Always keep a calculator with you and double check everything.