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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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