If you're a first-time car buyer, you may be wondering how you can go about obtaining the best auto loan. With so many financing options available these days, securing a car loan can be a confusing process. However, with a little bit of research and effort, you can be well on your way to obtaining the car loan that you need.
You should be aware of the fact that car loans are extremely common, about 70% of all new cars are financed. A number of used cars are financed as well. There are a large number of options for auto financing these days. For instance, you can obtain your loan from a bank, finance company, credit union, or even a professional organization that you happen to have membership in. It is also possible to obtain financing through the auto dealership. You may also decide to finance your car through a home equity loan, which can provide you with an exceptional interest rate.
Interest Rate Know-How
You should know at the outset that your interest rate may vary depending on whether your car is used or new. The interest rates for new vehicles tend to be lower than those for pre-owned vehicles. Also, loan terms tend to be more generous for new cars and trucks than for used models.
Lengthy Loans
If you have a particularly lengthy loan term, it will cost you more money in the long run. There is actually a trend nowadays for longer loans, some run as long as 84 months. This is because many people make the mistake of thinking that they can afford a more expensive car if the payments are spread out over a longer period of time. However, if you truly believe that it would take you seven years to pay off a car loan, you might be better off, financially speaking, opting for a less expensive vehicle. This may be particularly true, given the fact that a lengthy loan may require an incredibly high interest rate.
Tempting Incentives
There are some car dealers who claim that they will pay off the balance of your car loan, no matter what the amount of money left on it. However, if you agree to such a deal, you will simply be transferring your remaining balance onto your new car loan. This means that, if you're interested in purchasing a $19,000 car, but you still have $3,500 left on your current car loan, you'll be taking out a $22,500 loan in order to cover your expenses.
Such a program is not attractive in the long run. You would be much better off if you simply waited to pay off your outstanding balance before purchasing a new vehicle. If you simply cannot wait to buy another car, consider one that is more affordable. Otherwise, you could find yourself falling even farther down the economic ladder.
With some smart strategic planning, you can obtain an auto loan that will leave you in a good financial position in the years ahead. Considering the fact that cars tend to lose their market value quickly, a cost-efficient car loan may be one of the best financial decisions you'll ever make.
Rebuild.org brings you the latest news headlines related to Auto Loans:
- Auto loans and the notorious “Yo-Yo” dealer scam
A new report reveals how unscrupulous dealers scam many customers with a contemptible scam: "Yo-Yo" auto loans.
[April 17th, 2012] - Auto loans more available as FTC tackles yet another dealer scam
It may be easier to get approved for auto loans now than it has been for years, but you should still take care when choosing one. The Federal Trade Commission has recently highlighted yet another of the many scams that some dealers use to entrap the unwary.
[April 4th, 2012] - Surprising reasons why you might look for a new auto loan
There are dozens, if not hundreds, of reasons why you might be checking out auto loans to finance a change of vehicle. Here are a couple you may not have previously considered.
[April 4th, 2012] - Give me your tired, your poor, your huddled masses… of car dealers
After years of stiffing consumers with countless scams, especially over auto loans, car dealers are now wanting our sympathy!
[April 4th, 2012] - More good news on auto loans
The National Automobile Dealers Association has been meeting over the weekend, and delegates were more upbeat than they have been for years.
[April 4th, 2012]
