Tuesday, January 20, 2009

Auto Financing

Making sure to finance a vehicle properly will greatly reduce the cost of your next new or used car. "Auto Financing" is a general term meaning how you pay for the vehicle. In most cases, cars are financed by taking out an auto loan to buy or lease the car. This involves getting a credit check. By checking your credit history first, and answering all the tough car finance questions up front, you will be more prepared to handle issues at the dealership. Many cars have $3,000-$6,000 factory to dealer cash incentives. If you are unaware of the current rebates, you'll be leaving money on the table. Dealers will often give up most or all of their factory to dealer incentive, passing the savings to you. These incentives combined with our other car buying tips, will often result in deals below invoice pricing.

FinancingIn the articles on these pages we will not only look at the general topic of car finance but we will consider the related topics of credit history, car loan refinancing, auto insurance and all issues pertaining to special car finance considerations. Although most people don't like to think about the subject of auto financing (instead they like to focus on that shiny new car) it is actually the most important part of car buying. While your credit will be checked by the salesman, often before negotiations begin, this is not the only way you can go to get your new car. You do not have to throw yourself at the mercy of the dealership even for special car finance situations. Being prepared before you get to the dealership will mean that you can take charge of your credit and get the new car loan that serves you best.

Keep this in mind: when you negotiate with the salesman for the most favorable auto loan, nothing is permanent until you have it in writing. The sales contract is prepared once negotiations seem to be over. This is handled in the finance and insurance office (the so-called "F&I Room"). It is here that the deal is made or lost. By reading these articles on new and used car financing you will be better prepared to get the best auto loan possible. And who knows? With the money you will be saving, maybe you can move up to that more expensive new car you've been eyeing.

Once you've decided on the best way to raise the cash for a new car, follow these top tips to make sure you get the best deal:
  • Do shop around. Loans are like any other consumer goods, so don't be afraid to haggle for a better deal
  • Don't be taken in by zero or low percentage deals. Check the APR (annual percentage rate) as this is the real decider in the cost of borrowing. Look for a deal with a low APR
  • Do look at other ways to finance the car as these could be more convenient and cheaper
  • Don't assume the dealer is offering the best rate. Compare with high street banks and online lenders
  • Ask to see examples of repayment plans with and without extras such as payment protection and other insurances as these can seriously bump up the cost
  • Find out what all of the small print means and ask lots of questions. If you don't understand anything or the lender uses jargon, ask them to explain
  • Do think twice about companies offering easy finance to anyone. Most are reputable, but their interest rates can be high. You may be better off sorting your finances so you can get credit from mainstream lenders
  • Do use the internet. It's quick, easy and there are hundreds of deals available, many of them far cheaper than the high street banks'
  • Do contact your lender if you are having difficulty repaying the loan. All reputable lenders will happily rearrange terms to make life easier as it's in their interests that you continue to repay the loan.
  • No comments:

    Post a Comment