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 Loan Delinquencies Jump in May
The Wall Street Journal reports that auto loan delinquencies increased by 22% during May, as compared to delinquency rates reported in April. Ongoing high unemployment rates are seen as a major reason for the increase. Another potential cause of delinquent auto loans arises when consumers focus on getting quick auto loans without understanding loan terms and conditions. Auto [...]
[July 1st, 2009] - Auto Loans: Delinquencies Fall, Credit Challenges Continue
NASDAQ reports that auto loan delinquencies were lower during the first quarter of 2009, but that economic woes including tight job markets, credit restrictions, and less discretionary income are expected to negatively impact consumers’ buying power into next year. Fast Loan Not Necessarily Best Auto Loan Consumers looking for auto loans may be tempted to take onvenient financing offered by [...]
[June 20th, 2009] - Auto Loans: Hard to Get?
In spite of auto dealers offering great deals on new cars, Fortune Magazine report that difficulties getting approved for auto loans is causing headaches for potential car buyers who need a loan. With US automakers struggling to regain customer confidence, why should there be a problem with in-house auto loans? GMAC Accepting Lower Credit Scores for [...]
[June 10th, 2009] - Auto Loans: Demand for TALF Funds May Improve Consumer Access
In the wake of GM’s bankruptcy filing, Reuters reports that demand for funds under the federal government’s Term Asset Backed Securities Loan Facility (TALF) has increased by about 8% since May, and approximatey 145% since March. The use of the TALF program by banks and consumer lenders should increase funding available for consumder credit including auto [...]
[June 5th, 2009] - Auto Loans and Bankruptcy: 5 Things to Consider
You’re having financial problems and are considering filing bankruptcy. Does filing bankruptcy mean you get to keep your car? Is there anything you can do to work out an auto loan besides filing bankruptcy? If have an auto loan, here are some things to consider before filing bankruptcy. An auto loan is a secured loan: This means [...]
[May 27th, 2009]
