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After you determine your credit status,
you should search for options on the financing model you want.
You will get a variety of APRs. Always go with a simple interest
loan. This type of loan is based on an amortization schedule. Therefore
as you pay your loan down, more of your payment goes toward the
principal balance. You definitely want to stay away from an "add
on loan". This type of loan adds all of the interest on the borrowed
amount at the beginning of the term. For example, in an add on loan
scenario, your interest that would be accrued over 60 months would
be added on and you would be paying down your principal after all
of the accrued interest is paid off. NOT FAIR!! If you want to pay
your auto loan off early, stay away from this option. If you have
bad credit, this is probably the only type of loan you might find.
You can begin the process of arranging for financing your car here,
where the hard work of comparison-shopping is done for you - for
FREE! Note: A word on financing: It is important that you arrange
your financing prior to negotiating your vehicle's price with the
dealer--ideally, before you even visit a dealership. Check our recommended
links page for the best deals and calculators.
We will be listing quality financing and credit companies in our
products and service page.
Your
Proactive Steps To Saving Money On A New Car
1) Create a budget, obtain your credit
report, get your financing in order.
2) Use free internet sites for dealer cost, car reviews, and price
your trade-in.
3) Visit dealers to check base prices and options pricing of your
car.
4) Take the info home, continue researching to determine the dealer's
cost.
5) Go to the dealer to negotiate your offer and first and foremost
check on line.
6) Close the deal, avoid needless extras, use the internet to buy
an extended warranty.
Note:
A
word on financing:
It
is important that you arrange your financing prior to negotiating
your vehicle's price with the dealer--ideally, before you even visit
a dealership (this is where dealers can make the most money from
you). Submit a simple application, and within 2 business days you
will receive financing offers from multiple lending institutions,
all competing for your business. The advantage of your local bank
is that there is the possibility of a personal relationship with
your banker. If you have a long term banking relationship at this
local branch, you probably will get a good competitive rate with
good terms. The disadvantage of a local (and smaller) bank may be
an un-competitive rate. This usually applies to a non-established
customer. Your down payment may play a part in quality finance options.
If you have a larger down payment, you have more flexibility on
negotiating a favorable loan interest rate on your loan balance.
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Are You Upside-down On Your Loan?
Here
is another reason not to trade in cars at a dealer. Too many people
are upside down on their current loans. If you are upside down on
your current car loan you are at a financial disadvantage, and you
should not be buying a new car. A person who is upside-down on a
loan and is looking for a new car is a victim. Put down 20% when
you buy a new car. You should payoff your current loan until the
car is worth more than what you owe on it. Payoff your balance if
possible before you trade in your car. Any loan balance due on a
trade-in must be paid by you. The dealer finances the amount you
still owe into the new loan. How the dealer hides these dollars
will not relieve you of your obligation to that balance. Don't finance
it into your new purchase/lease as this increases your payment.
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