How To Get The Best Auto Loans?
The first car that I ever owned was a 1965 Buick Wild Cat convertible
. My parents paid $1,100, brand new and never had to take out a loan to pay for the car. The world has changed dramatically during the last 40 years though and cars have quadrupled in price, with some cars costing as much as a home and interest rates climbing higher and higher. Buying a car in todays requires financing for most people and knowing how to get the best deal can save a great deal of money.
Many car shoppers for years opted for taking out short term, 3-5 years, auto loans. Today however some people are looking to cut the amount of their monthly payment by taking out a longer term, 6-8 years, as a way to cut monthly expenses. While a longer term loan can lower your monthly payment, they also come with inherent risks and expenses. Longer term loans usually carry a higher interest rate, increasing how much you will end up paying for the car, so while youll spend less monthly, youll pay more overall. Instead of taking out a longer term loan, think about the following ways that you can lower your payments without increasing your overall costs. Here are a few tips.
Think about getting a home equity loan to pay off the auto immediately. Home equity loans can offer a much lower interest rate than the standard auto loan.
Before you march into the dealer, try to get your loan pre-qualified. Dealers financing comes at a generally higher interest rate that a bank or finance company usually offers. As with any loan, interest is the snake in the grass that few see until it is too late.
Make a larger down payment. Depending on your credit score you can get an auto loan for as little as 5% down. Boosting your down payment to 20% or more can save you a great deal in interest payments and reduce the length and total cost of your loan.
If you can only afford a VW Beetle, never do shopping for a Mercedes or let a high pressure car sales man sell you a product you cant afford.
Taking out an auto loan can be tricky. Read the fine print, know what you are spending and buy what you can afford.
by: Chris Cornell
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