You see and hear it everywhere you go, signs offering deals on auto loans. I just heard one on the radio yesterday. A car dealer offering autos for sale for $5.00. Makes me want to run out and get five today. Wait! not so fast. If it sounds too good to be true, it probably is. And it was. If only getting an auto loan was that easy.
It turns out the $5.00 was for the down payment. While still a good deal, other hidden costs will show up usually somewhere at the signing of the paperwork. The down payment you thought you saved is now tacked on to the final price of the auto. Another misleading ad, one of the tricks that car dealerships will use to get you to stop in along with their notorious schemes to get you the auto loan you so desperately need for the annual percentage rate you can do without. If in doubt as to what the current annual percentage rate is for an auto loan, call a bank or your credit union first.
Know beforehand what you can spend for a down payment and what you can afford to pay monthly. There are plenty of car payment calculators on the Internet. Putting less money down means your payments will be higher. Once you leave the car dealership lot, your car just decreased in value from a new car to a used car. Owing more on the auto than it is worth will leave you upside-down, meaning you will owe more than the car is worth. After you find the car you can afford, keep track of your payments in Microsoft Money or a similar program.
Shop around for the best deal before getting an auto loan. Times are rough now for car dealerships so you should be able to negotiate the best deal. Not all car dealerships have the same financing companies. Each bank offers a different rate even though your credit score shows creditworthiness. Online financing companies usually offer 1% to 2% less in their annual percentage rate. Credit Unions can give you the best rate over car dealership financing.
Now that you have found the perfect car for you, run your own credit report to see what your credit looks like. It is better to know beforehand where you stand. This will give you an idea of where you stand in terms of money that you can finance and the annual percentage rate you can expect.
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Figure in the cost of insurance. Some lenders require more insurance than others when it comes to financing terms. Also keep in mind there will costs for registering the auto, sales tax and license plate fees. Some dealerships will take this upfront cost out of the down payment; other
financing companies will tack it on to the final borrowed amount, which winds up costing you more in the long run for the loan. Ask while in the initial stages of negotiating so that you get a clear understanding of all fees and charges.
Some lenders will charge all kinds of additional costs, such as application fees, document preparation charges or credit score fees. As you compare various lenders, keep an eye on outrageous or unusual fees. If applying online for an
auto loan and the
finance company is tacking on an additional cost that no other company is charging, you can request to choose another lender. Remember, nothing is final until they get you to sign for the auto.
Your
auto loan should have some flexibility in it in case of uncertain life hardships. Some lenders allow for paying off the loan early or making extra payments to pay off the loan faster. Read the fine print in every contract before signing.
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loans,
auto