Fed Meeting May Determine Future of Lender Assistance

[Aug 12, 2009.]

 

The results of today's meeting of the Federal Reserve could indicate if and when the federal government will continue to funnel cash into programs including cash infusions to US lending institutions. Should the Fed stop assistance to lenders, there may be even fewer auto loan options available to consumers. If you're in the market for a vehicle loan, it's worthwhile to shop and compare rates, terms and incentives offered for auto loans.

Auto Loans: Prepare Before Shopping for Cars or a Loan

As auto dealers compete for your business, they may offer attractive incentives and financing rates, but it's a good idea to shop auto loans from lenders including your bank or credit union as well. Look for an auto loan before you start looking for your next vehicle. Going to an auto dealership with loan quotes can help in negotiating price and auto loan terms. You'll also have an idea of how much you can afford to borrow, and can focus your interest on rides that you can comfortably afford.

Auto Loans: When the Honeymoon is Over

Auto dealerships provide in-house financing to facilitate auto sales. Who hasn't walked onto a car lot, fallen in love with a car, and been conveniently directed to the dealership's finance department? In many cases, dealerships are able to offer discounts and incentives not offered by traditional lenders, but comparing rates and terms for auto loans before looking for your next car can help keep you from being rushed into buying a car you can't afford. Compare more than finance rates (APR--annual percentage rates) for auto loans. It's important to know the amount of monthly payments, and if they're subject to change.

Your Auto Loan: The Role of a Down Payment

The more you can put down toward an auto loan, the less you'll need to borrow, and the less risk the lender assumes. If you are able to offer a solid trade-in and some cash, ask for a lower rate. Negotiate, and negotiate some more.  The larger your down payment, the less your monthly payments will be, and the faster you can pay off your auto loan.

Auto Loan Terms: Don't be Afraid to Walk

Know how much you can afford to borrow and read and understand loan terms and conditions before accepting any auto loan.  Be willing to walk away and visit multiple auto dealers and loan providers. Don't get talked into buying more car than you can afford. An auto repossession is expensive, embarrassing, and a serious blemish on your credit reports. Taking time to shop for your best auto deal and loan can help you find your new car and pay it off painlessly.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.