Buying a vehicle outright is not likely possible for most consumers, and
quite frankly, really is not practical. Taking advantage of an auto loan is
probably going to be your best option when buying a new or used car. Featured
below is information that will help you get the most car for your money and the
best interest rates for your financing.
Mortgages and Auto Loans are not the Same!
When in the market for a new home, you should like to buy as much house as
you can. It is not a bad idea to leave as little of a down payment as you can.
Dissimilar to cars that go down in value over time, otherwise known as
depreciation, the value of most homes and properties rise in value.
On the contrary, when you finance an automobile, you want to put down as much
money as you can afford for your down payment. This will result in you borrowing
less, as well as avoiding owing more for your car than what the car is worth
(otherwise known as being upside down on your car loan) because of new car
depreciation.
Understanding Interest Rates
No matter if you are buying a car from private party or from a dealership, it is
always a good idea to compare auto loan rates from several different banks and
online sources. New car loan rates are generally lower than rates associated
with used cars. However, you can save money by buying a 'certified pre-owned'
car. Buying certified pre-owned will allow you to buy a high-quality used car
with interest rates similar to new cars. Also, if you are buying a car from
dealer, interest rates will be lower than when buying from a private party.
It is important to understand that if you have poor credit, or no credit,
interest rates you receive are going to be higher than if you have good credit.
However, if you can maintain a positive payment history for your auto loan, you
can consider refinancing at a lower rate after a year or so.
**When purchasing a vehicle from a dealer, never discuss your need for financing
until a final sale price is agreed upon. Dealers will always look to squeeze
every penny out of you. Mentioning your need for a car loan will most likely
result in a higher sale price.
Auto Loan Terms
Car loan terms generally range between 36-60 months. Your monthly payments will
be lower the longer your finance your car for. However, the longer your car loan
term is, the more money you will end paying in interest over the entire span of
the loan. As a result, choosing the length of your auto loan is going to be very
important.
Also, if you like to trade your vehicle in, or sell every few years, a long auto
loan term should be avoided. Why$%: If you have three years left on a five year
loan, you will lose money as a result of owing more than the car is worth.
In conclusion....
The decisions you make when buying a car will either save you money, or make
you lose money. You need to do your research, remain calm and never buy on
impulse or be forced into purchasing a car that you do not really like.
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