The Simple Guide to Car Financing: Shopping for Loans

When financing a car, you have more options than visiting a dealership. And we recommend you try those out too. Because generally, dealership financing requires a strong sense of awareness. You have to be meticulous to avoid overcharging and scamming. So we recommend you try financing away from exciting moods that salesmen want to create. And this is what we’ll be talking about in this article.

When shopping for a car, you have to start shopping for the money. And before shopping for money, you have to budget. You have to know how much you’ll be able to fork out on a monthly basis. Once you have that settled, we recommend you go online and visit a “car payment calculator.” Then calculate the total purchase amount, with interest rates of your loans considered. Thus, we recommend you visit the website of your bank to get information on that.

(Example): After determining that your affordable monthly payments max out at $400, you can begin looking at interest rates. And you may have looked up at interest rates, to find them at 5%. Additionally, you may have to pay that car off within the next 5 years. Therefore, you might get a car that doesn’t exceed $20,000 in price.

By setting a budget in stone, you’ll find yourself coping with monthly payments without worry. You’ll also end up purchasing a car you can afford, even if it doesn’t suit your dream image.

But dreams aside, always get a car within your budget. And don’t wait until you visit the dealership, just to find out the price that you’ll be paying for vehicle. It’s just the smart way of approaching such errands.

Also, arguing over monthly payment is useless, without knowing the total car price. Because dealers may simply expand the terms of the loan, getting you to covertly pay a little more.

Now that you’re equipped with an understanding of loans and research, let’s look into shopping for one.

Shopping For Loans.

When shopping for a loans, your primary go-to should be your bank. Learn about the rates they offer, and total costs of loans. If you’ve already established a good relation with your bank, you may be able to get a good loan offer.

You can also shop for a loan at a credit unions. They’ll sometimes offer you lower interest rates, and reduced operating costs. But regardless, you have to make sure that you’re a member there.

Credit unions and banks are excellent starting options for a good reason. Both give you the time to ask and study the details of the contract. They also hint you on the price you’re paying (whether it’s reasonable or horrible). We recommend you listen and keep that information, especially before heading to a dealership. You can use that information at a dealership to your advantage, by comparing offers.

There’s also something you have to remember. If you own a home, you get the option to purchase a home equity loan, to finance your own car. This will allow you to reduce some of the interest you’ll pay. And you’ll also get an improved rate, which you may not find with an auto loan.

So that’s it for your starting option. Always be sure to look for lenders with good reputations (especially if you’re searching online).

But Just to Note…

Used car salesman aren’t necessarily scams. You may find a dealership that provides you an excellent offer for financing. But when financing, you have to be alert of what you’re being offered, what you’re told, and what you’re “not being told.” Also, make sure you accurately inspect and receive whatever you think you’re getting. If the dealer offers you a financing deal that’s better than your other options, then accept.

On the next page, you’ll get a “cheat sheet” for vital things to look out for when funding a new car.

Car Dealer Cheat Sheet.

We compiled a cheat sheet, including the most vital information you need in this article. Consider this to be a checklist you can use when shopping for car. In this checklist, we’ll mention 10 things you must do before heading to a dealership. We’ll also talk about some things to do once you get there.

1. Acquire a copy of your credit report. Fix any problems that might reduce your credit score.
2. “An accurate version” must be with you when negotiating finances at your dealership.
3. Always know the max amount you’ll spend on the car (in terms of total price, and not just monthly payments).
4. Go to the manufacturer website. Look for special rebates, incentives, and deals you might make use of. Many deals tend to be available, whether you choose to finance at a dealership or not. Print them and keep them on hand to help you in your negotiations with dealers.
5. Check the Kelly Blue Book and try to find your car’s value. Also, visit a mechanic, and get a pricing list for car fixes. This is in case a dealer overcharges you for certain repairs.
6. After choosing the car you’ll buy, head to the manufacturer website, and print out pricing of the models with their features. This is to keep information on hand that you can use at the dealership.
7. Buy your loans at credit unions, banks, and financial institutions. Calculate interest-rate information in detail, and take the information to the dealership with you. Check for APR, type of loan (simple-interest or front-loaded), loan terms, application fees, and prepayment penalties. Or just the loan, and buy the car as a bash buyer.
8. Rebates on your down payment are better than 0% APR interest.
9. But, it’s better to have your rebates mailed to you. Don’t let the dealer apply the rebate to your down payment. Pay the down payment from your savings, then replace it after you receive the check for the rebate.
10. If a dealer’s is selling you a car, they’re making money on it. So don’t be afraid to leave the dealership in a profitable position!