When you have set your heart on a particular new car and are ready to go through with the purchase it can be very tempting to take the easy route and accept the finance deal being offered to you by the dealership.
Car finance definitely shouldn’t be an afterthought and if it, you could find it turns out to be a costly mistake.
Here is an insight into why you need to work at getting the right finance deal and how to go about getting the most suitable and cost-effective auto loan available to you. Including why it pays to view the car price and loan deal as separate transactions, why a shorter loan period is preferable, plus an argument for putting more of your cash down.
It is always a good idea to visit a site like http://auto.loan/ in order to check out your loan options before you make your way inside any car showroom.
Knowledge is power and being able to have some loan rates to use as a comparison will help you to identify whether the car salesman is offering you a reasonable finance option or trying to get you to sign up to a costly deal that suits them financially (when they get a commission) but not you.
A classic ploy used regularly by car salesmen is to get you to focus on the amount you want to pay each month for the car, but negotiating to buy a new car based on your preferred monthly budget is more than likely going to mask the fact that you are not paying the lowest price for the car itself.
It is much better to work on negotiating the price of the car as your priority and once you have the best price that the salesman is prepared to sell the vehicle to you for you can then talk about how to finance it.
Don’t fall for the tactic of buying the car based on the monthly payment as you could end up paying more than you need to.
Armed with the right information
It is always much better to negotiate from a position of strength and one of the best ways to do this is to know what your current credit score is and how attractive you are to lenders as a borrowing proposition.
If you have a high credit score this should enable you to gain access to some of the best loan rates but if your score is lower than ideal, there is a reasonable chance that you might still be able to get a finance deal but the loan rate will be much higher, making it more expensive to borrow.
Whether you have a high or low credit score, knowing where you stand will allow you to understand what your loan options are should help you to negotiate a better deal when you know what sort of loan rate your score justifies.
Keep it short
Another savvy finance tip to keep in mind is the need to keep the loan term as short as possible.
It can be tempting to stretch the loan period out over a number of extra years in order to make the monthly payments more affordable, but the sting in the tail is the fact that the longer you owe the money for the more expensive the loan becomes.
You will be paying interest charges on the amount outstanding and the basic math is the longer you take to repay your loan the more interest you will end up paying.
Always bear this in mind when you are considering your loan options. It would be better to lower your sights slightly and go for a slightly cheaper model so that you can afford the payments over a shorter loan period, than extending the loan period just so you can buy a more expensive set of wheels.
A good start to your loan
Car dealers want to make it as easy and painless as possible to buy your car and this is why you may not be asked to pay much of a down payment, or any sort of money upfront at all.
Even if you get offered a deal that doesn’t involve a big down payment consider paying about 20% of the total price if your finances can stand it.
The with putting a good chunk of cash down like this is that you will already own more the car yourself from day one, plus you won’t need to borrow so much on finance.
If you are in the market for a new car finance, make sure you focus on finance rather than making it an afterthought.