Auto Loans
How to Save On Your Auto Loan
Most new cars and trucks are financed, and you can
also finance a used car. But to do it right you must be prepared
before, and after, you reach the car lot.
You can, of course, pay cash. But for most of us, that's not an
option. Hence the need for an auto loan to cover the balance.
Auto loan sources
You can get an auto loan from a bank, credit union or other
financial institutions. You can have these loans approved before you
ever hit the showroom. That's a major plus in most car deals.
Or you can shop for a loan online. These sources of
financing will usually offer the lowest rates you'll find.
Online Auto Loans
Online lenders like E-Loan represent all the major lenders. With one
short application, you can quickly choose your best deal and have
your check tomorrow.
That's not too shabby in the convenience department. Plus, their
rates are the lowest you'll find because they're taking all the
costs out of the process. There's not even an origination fee.
Dealer financing
You can also get financing from the dealer or auto manufacturer.
Just don't expect to get the best deal unless you really know how to
negotiate.
These guys are pros and they negotiate all day, every day. You on
the other hand might negotiate a car loan face-to-face once a year.
A general rule of thumb says that dealer/manufacturer financing will
cost you more, but it isn't written in stone. There will be
occasions where a dealer will actually give you the best deal.
Unfortunately, those occasions are not predictable (despite endless "must sell" and "no money down" advertising by dealers). The only way to be sure is by comparison shopping.
Get online auto loan rate quotes
The best place to comparison shop auto loans is online. E-Loan
has the best interest rates on car loans, and for that matter, on home
loans as well.
One other auto loan choice is a home equity loan. You'll get a good interest
rate and the payments will be tax deductible. But be sure such a
loan won't leave you in any danger of losing your house -- after
all, it's just a car.
Consider a cosigner or a lease
If financing is a stretch, your family may
loan you money or co-sign for a loan. If they do, make sure all
parties are fully aware of every detail of the loan and the
possibilities should circumstances change or things go wrong.
Keep leasing in mind even if you think you don't want to do it. It
may be an option you like more as you go along.
Analyze the numbers
Interest rates on new cars are lower than on used vehicles. And, in
general, new cars can be financed over longer terms than used ones.
This equation can make a new car cheaper than a used one in many
cases.
Not all the numbers in your deal will be set in stone before you
buy, especially if you go with dealer/manufacturer financing. The
interest rate you pay can vary, and so can the down payment and
other details like the value of your trade in or the length of the
loan you take.
You have to decide. Don't let one number dominate
you. For example, a really low down payment is not by itself a
guarantee of a good deal. You need to consider all the numbers
together to know what sort of deal you're getting.
Don't get tricked at the car dealer
Dealers will often paint a low price on the windshield, then make
their money back when they finance the car. Sometimes, dealers offer
very low interest rates for specific cars or models, but then they
won't come down a penny on the price.
Or to qualify for that rate
you'll have to pony up a large down payment. You might find it a
better deal to pay higher financing on a low-price car or you may go
for a vehicle with a low down payment.
Bottom line
Know your numbers. Be sure, every step of the way,
that you know just how much you are paying, when, how and what for!
No exceptions!
In simple terms, you will pay a lower monthly amount the longer the
term of the loan -- but in the end you will pay out more in total
for the vehicle this way.
The longer the loan, the longer it takes
you to build up equity -- that is, for the car to be worth more than
you owe on it. So with a long loan it will usually be some time
before you can re-sell the vehicle and clear the loan.
Know your contract
Read -- and be sure you understand -- every word of every document
you sign or initial. No exceptions.
Sign nothing unless you understand what it is, make sure every "i"
is dotted and every "t" is crossed and there are no blanks left.
Make sure any changes to the basic contracts are signed or initialed
by both parties.
If you get embarrassed by a feeling of asking too much, imagine how
much fun it will be to tell a dealer later that he has got it wrong
and owes you something. He will haul out that contract you caved on.
When you sign the contract make sure the dealership has an
authorized representative sign -- you don't want to find out later
that the nice salesperson was not empowered to sign on behalf of the
dealership.
And always make sure you have copies of everything you signed.
Be wary of advertising
Most car advertising promises special offers -- for
first-time buyers, people with less than perfect credit or senior
citizens. In offering loans to people who don't have stellar credit,
lenders often require a large down payment and a high interest rate.
If it sounds too good to be true, it usually is!
If you need to sell the car in the short-term, or if you write it
off in an accident, you may owe more than the car is worth. And with
any special offer, consider the reputation of the dealer making it.
Truth in advertising laws can also help you know just what a
dealership is offering and whether that outfit is following the
rules.
Increase your down payment
During the debate over price and total cost of the car, remember
that you control one major variable -- the down payment. Make it
bigger and you can start bringing down the monthly payment amount.
Rebates make some deals sound just made for you. But rebates should
be considered just another variable factor in your overall cost.
Crunch the numbers with a loan calculator
Use our Auto Loan Calculator
to work out just how much a rebate will save you.
Also keep in mind that rebates can artificially jack up the
popularity of a car, then two or three years down the road when it
comes to reselling the car, that artificial popularity has gone. Now
you're trying to get good money for a vehicle very few people want.
Golden rule of auto financing
Be prepared. Uncertainty is your enemy, and salespeople are
experienced at recognizing and using it.
E-Loan has great rates
That's why it pays to have your auto loan in hand before you
actually shop for your new car.
Apply online at
E-Loan
today. It's quick (takes 5 minutes), fast
(you're approved in 15 minutes), and easy (it's a very short form).
Plus, you can't beat their low rates!
Related Pages
Payment Calculators - Choose from seven car loan calculators - Calculate loan payments - Compare leasing with buying - See how auto loan rate and length affect your payments.
Auto Finance Terms - Provides auto finance terms information, car buying tips, auto loan and car loan finance tips, and the best auto financing rates.
Auto Financing - Provides auto loan and car
loan finance tips, auto loan calculators and car loan calculator, and the best
auto financing rates.
Auto Loan News