60-Second Guide to Auto Loans

[Sep 21, 2009.]

 

Car buyers who pay cash for cars usually score the best deals. But many folks just don't have enough money for such a large purchase and end up applying for an auto loan. Here is a 60-second guide to shopping for an auto loan.

Borrow as Small a Loan as Possible

Anytime someone drives a new vehicle off a car lot it immediate starts to depreciate. That's why in many cases it makes sense to purchase a dependable used car instead of a new one. But whether a person buys new or used he should keep his spending in check and avoid buying more car than he can afford. Borrowers should only apply for an auto loan that is within their budget, otherwise they may be setting themselves up for a not-so-distant date with the repo man.

Compare Loans from Banks, Credit Unions, and Auto Dealers

Car salespeople will do whatever they can to get buyers to finance vehicles through their dealership. But borrowers may find a better deal by comparing auto loans from neighborhood banks and credit unions. It's important to compare the terms and interest rates of the various loan products. 

Getting Loan Quotes

Getting auto loan quotes based on different down payment scenarios can also help car buyers make the most informed decision about financing a vehicle. The more money a person puts down, the less their monthly payments will be. Some borrowers who plan to buy an inexpensive used car may find that it makes sense to get an unsecured personal loan for a few thousand dollars. Compare quotes for unsecured personal loans here.

Negotiate the Price Before Mentioning Financing

To get the best deal car buyers should negotiate a purchase price for the vehicle they want before getting into a discussion about financing through a dealer. They also should wait to mention a car they plan to trade in until after a firm purchase price has been agreed upon. This will keep the car salesperson from doing a lot of confusing calculations.

Car Loans Are Still Available

Despite the difficulties with the economy, car dealers are still willing to lend money to finance purchases. But many dealers auto lenders are discouraging borrowers from leasing cars that they really can't afford. So borrowers should be prepared to shop within their means if they expect to qualify for an auto loan.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.