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GETTING FINANCING FROM DEALERS - BE CAREFUL!
Star Loan Services offers
car loans for purchases
directly from a car dealership, or from private sellers
(person-to-person). Utilizing our services will allow you
to eliminate the hardball tactics auto dealers will use
when they look to offer auto financing plans. However,
there are people that would still prefer to get their
auto loans from the dealership instead of an outside
source.
Below are some common tricks to be aware of when securing
financing from the dealership.
The monthly payment trap
Every car dealer is going to play the 'how low do you
want to go' game when it comes to monthly car loan
payments. Be careful! Lower monthly payments means that
your car loan is going to be a longer term, or length of
time. The longer the car loan, the more you will pay in
interest rates over the length of the loan. So, know what
you want to pay, want kind of
interest rates you expect and what length of loan you
need before you go to the dealership! A good idea would
be to use the
auto
loan calculator to crunch some number.
Becoming
'upside down' on your car loan
Be very leery of 'offers' made by the dealer that do
not require any money for down payments, or deals that
waive payments for the first few months.
If you chose to pay no down payment, or a minimal one,
and reduce your monthly payments by stretching your car
loan over four or five years, you are likely to get
caught 'upside down'. Being 'upside down' means you owe
more on a car than what your automobile is worth. You are
now in the 'hole' with regards to your auto loan.
You can avoid being upside down by leaving a down payment
of 20% or more. To further minimize the risk of owing
more principal than your car is worth is to utilize a car
loan with a shorter than longer term. Be aware that you
still want to have car loan payments that you can afford.
The dealer often plays financing middleman
Before you decide to go into the dealership. We
advise you to
apply for a car loan with Star Loan Services. We
offer very competitive rates and are likely to be able to
offer you auto financing at a lower rate than any
dealership.
If you are not interested in our auto loan services,
please check out the
auto loan rates that we offer and utilize the
car loan calculator to predetermine what payments can
be. It is a good idea to know what your 'ball park'
interest rates and payments are going to be. If you do
not, the dealer will likely look to take advantage of
you.
Rule of 78
'Rule of 78' is when all of the interest rate from
your car loan is paid off in the first year of the loan.
This will not allow you to cut down in interest by making
more payments or by selling your car before the loan
expires. Also, utilizing this type of loan will often
result in you becoming 'upside down' no matter how much
you leave as deposit.
Extra-fees and add-ons
Dealers are most likely going to always try and get
every dollar they can out of you when you utilize
financing offered by them. So make sure you know what you
are obligated to pay for, and what you are not.
Related Reading:
Obtaining Your Credit Report Before Applying for New Car
Financing
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