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Car Loans
Compared to ten years ago the number of cars on the road has increased tremendously. Some of us may be fortunate to buy a vehicle with cash while others will be forced to take a loan. However, whether you acquire your loan through a bank or a credit union, there are some things that you should keep in mind:
- Your credit history can determine whether you qualify for a loan and what interest rate you will pay. If you're not sure about your score/history you should probably check to make sure that there are no mistakes. If you have bad credit, there are companies that may lend you money, but be prepared to pay high interest rates.
- Compare rates. Get several quotes before you buy your car.
- Gather required information. Lenders will require you to provide your name and address and employer information. They will also require financial information such as whether you own or rent a home, how much your payment is how much money you own on credit cards, etc.
To get a good car loan through a dealer takes some preparation.
Here is what the car shopper needs to know.
Before going to the dealer
- Decide on the car model plus features such as air conditioning, AM/FM stereo etc., and obtain the manufacturer's suggested list price.
- Decide how long you want to carry the loan.
- Check the interest rate on a loan offered for that amount of money, for the desired number of years.
- Fill out the credit union or bank's application to see if its credit is sufficient to qualify for a loan at that interest rate.
At the dealer
- Give the dealer the description of the car and add-ons that were part of the estimate given to the bank or credit union.
- Ask for the interest rate on that amount of money for the same loan length given the bank.
- Tell the dealer that the bank or credit union offered a lower interest rate and wait for a counter offer, which will generally happen because the dealer wants to sell the car.
- Ask for the bottom line: the total of interest and principle that must be paid over the life of the loan.
- See if there is any pre-payment penalty if the loan is paid off early.
Consumers, when you have finally decided upon who will provide you with financing ensure you carefully understand all of the terms and conditions associated with it and when making your purchase ensure you get the best value for your money.
Remember, the power is yours!
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