No More Cash for Clunkers: Tips for Saving on Auto Loans

[Aug 24, 2009.]

 

As the government's "Cash for Clunkers" program ends, news reports cite a ripple effect of the program's benefits from car dealers to auto scrap yards and auto parts retailers. Meanwhile, auto shoppers will be looking for cheap auto loans. Here are some ideas for finding affordable vehicles and auto loans.

• Model year end sales: As 2010 models begin to roll in, auto dealers deeply discount remaining 2009 models. Along with discounted prices, dealers may offer cash incentives and low financing rates.


• Shop auto loan rates: Shopping rates for auto loans online is helpful for locating the best deals on auto loans.  Shopping and comparing loan quotes before shopping for a car can helpprevent an impulsive purchase that costs too much.


• Know what you can afford before you go: Review the household budget for determining how much to spend on a vehicle before shopping auto loans or vehicles. This can help in avoiding the seduction (and potential nightmare) of finding that dream ride combined with an unaffordable auto loan.


• Consider additional costs: Remember to estimate extra costs associated with buying a vehicle; auto insurance, sales tax, and registration can significantly increase the cost of buying of a new vehicle.


• Large down payment: The more valuable a trade in, or the more cash that can be contributed toward an auto purchases means less risk for the auto loan company, and may assist in getting lower auto loan rates.


• Auto Association/Employer Discount Programs: Auto/travel associations may offer auto purchase discounts through affiliate agreements with auto dealerships. Certain employers affiliated with auto industry firms may offer employee discounts for auto purchases and financing.


• Private party sale or donation: Low value vehicles typically yield more cash if sold via a private party transaction. It may also be possible to receive an income tax deduction for donating a vehicle to an IRS approved charitable organization. Please consult a tax professional for details.

Getting an auto loan is a major financial transation that provides a good way to establish or improve credit. As with any major financial transaction, it's worthwhile to thoroughly research available options before accepting an auto loan. Don't be afraid to ask questions of lenders, and don't be afraid to walk away if you have doubts about any aspect of the auto loan process.

 

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.