Car Finance – Tips

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By CraigNewby

Buying a car has become as prestigious and as inevitable as buying a home. Along with the car, car-related expenses, like fuel, maintenance, insurance and even accessories can get a big cut up from your budget. Know your limitations even before looking for a new car. If you would be paying for all car-related expenses, make it a point to spend no more than 10% of your total earnings. When negotiating for the price of your car, decide first on a price range and how much your down payment will be. If you choose a long arrangement under a car finance loan, your down payment will be at the minimum. If you decide to trade the car within the first year, you will realize that you actually owe more than your car is worth.

Never apply for a car finance loan that is more than 80% of the price of the car, as indicated in the dealer’s bill. Try to pay in cash or have equity for the car which is about 20% of the car’s true cost. Usually, your car dealer will send you to their in-house financing department for a car finance loan. It’s not obligatory that you should seek a car loan from your dealership just because you purchased the automobile from them. It’s you who should take the final decision regarding anything that is personal to you. The main draw is that dealers may have less-restrictive requirements than banks, however, they could insist on cut-rate car financing loans for you to apply for. Such car finance loans have 3% interest rates that could be attractive for the unsuspecting customer. Unfortunately, these low interest rates only apply only to certain models or short term car finance loans of 12 months tops. You’ll be surprised at how dealers make a lot of money on car finance loans, even when it’s done through the manufacturer.

Always negotiate the price before you reveal that you are thinking about applying for a car finance loan. If they know ahead of time that you plan on wrapping up the deal with a car finance loan, they will frequently try to create a dilemma for you by giving you a lower rate on a higher price or a lower price at a higher finance rate. If you decide on a car finance loan through the dealer, you can negotiate the interest rate. Dealerships usually have several loan sources, including local banks and the manufacturer’s credit company. Each source sets their rates to the dealer.

It is important to investigate other sources for a car finance loan, such as your bank or credit union, before you sign up for a deal. Go through the several sources available for car finance loan options, until you find out the one that best suits you. Find out from banks or credit unions if they have any special deals on car finance loans right now. Use a Car Finance Loan Worksheet to compare various sources. With so many choices for a car finance loan, you need to learn so much. Always consider your financing carefully. Come up with a shopping list of what you are looking for in a car finance loan deal. When you become well-informed, chances are, you will be saving more money and get the right car for your budget.