|
|
Whether you are planning to purchase a new or used car there are several things you should consider in order to get the best deal, and avoid breaking the bank. Following are ten tips to consider:
1. When applying for a car loan, or any loan for that matter, it is important to have a clear idea of how much you should expect to pay over the life of the loan. The amount you repay will be significantly higher than the sticker price; how much higher will depend on the interest rate and terms of your loan. If you don’t want to find yourself “upside down” (owing more than the car is worth when you are ready to trade) learn up front how much you can expect to pay.
2. Used cars generally carry lower sticker prices but higher interest rates and shorter loan terms than new cars. New cars typically cost more in terms of insurance and registration but carry lower interest rates. Do the math to make sure you get the best deal. There are a number of online loan calculators that can help you determine the cost of your new or new to you car. You may be surprised to learn that the used car is not always the cheapest.
3. Home equity loans can be a great option for purchasing a car. Many of these loans are tax deductible and offer a great deal in terms of savings and flexibility when you are negotiating with the dealer. Home equity loans are best for those with a firm hand, or willing to get a firm hand, on saving and spending. The loan is secured by your home and unchecked spending could result in foreclosure.
4. Take a look at your local credit union for some of the best rates and terms on car loans. You may be surprised to learn that you find more attractive rates than those available from the dealer or even your bank.
5. Cruise the Internet for the best car loan deals. There are a number of online finance companies that offer competitive rates and no hassle paperwork. Using the Internet allows you to search quickly and confidently for the best rates available given your particular credit profile. Don’t share any information until you are ready to apply; and then, share only with a reputable lender at a secure site.
6. When deciding on a new car try an online calculator to get an idea of what you can expect to shell out in monthly payments. Your work doesn’t stop there! You should also get information about costs related to operating the car such as routine maintenance, fuel, insurance and registration. In this way you can get a clear picture of how a new car might fit into your budget…or if it’s too much of a stretch.
7. If you choose dealer financing stay in the driver’s seat by refusing to get behind the wheel right away. Dealers are trained to create an emotional attachment by getting you behind the wheel early in the negotiation phase. Once you are hooked you are more likely to agree to terms that are less than stellar.
8. Get a handle on your credit profile before you visit the dealer. You can’t expect to negotiate from your strongest position if the dealer has more information than you do. Knowing your credit score should give you some idea of what you can ask for as well as what you can expect.
9. If you are just looking, or gathering information, don’t share your personal information. Excessive credit inquires impact your credit score; and credit inquires are unnecessary until you are ready to apply and buy.
10. Don’t buy on your first day out. Take your time and think about the deal; make sure that you have considered everything. If you feel confident that you are making the best deal you can always return to the dealer tomorrow. Also, plan the best time to buy. Generally, the best times are year end or in the last few days of the month as dealers are working to make quotas or clear inventory.