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GETTING THE RIGHT CAR LOAN
Unless you can absolutely afford to do so, buying a
car outright is just not practical. Utilizing a
car loan
is a good idea. However, in order to minimize the amount
of money you spend in interest and to maximize your
investment, you must take a few things into
consideration.....
Auto loans are very different than mortgages...
When you
buy a home, you want to buy as much house as
you can. Therefore, leaving a minimal down payment and
borrowing more is not a bad thing. Unlike automobiles
that depreciate in value over time, most homes and
property will increase in value over time.
When
financing an automobile, you want to leave the
largest down payment that you can. Resulting in you
borrowing less. Doing this will allow you absorb the hit
from
depreciation that automobiles have.
Interest rate education!
Whether you are
buying from a dealership or from a
private party, you should always compare auto loan rates
from the different online sources and banks available to
you. Take note that the good and bad credit
auto loan rates offered by Star Loan Services are
some of the most competitive online. If you have already
received an offer,
contact us and see if we can do
better!
When buying a car from a dealer, never mention that you
are going to need financing until a final price is agreed
upon. Doing so will likely result
in higher sale price. Also, is you are going to trade-in
your car, don't mention until a sale price has been
finalized. Dealers will always look to get the most out
of you. Learn more about
why getting financing from a dealer can be a bad idea.
**We suggest that you read more about
auto loan interest rates and the variables that influence
them.
Auto loan length education!
Deciding on the length on your auto loan is very
important. Available loan terms are typically between
35-60 months (3-5 years). The longer your loan term, the
lower your monthly payments are going to be. However, you
will end up paying more in interest over the entire life
of the loan.
Do you tend to sell or trade-in your car every few years?
Do you like driving new cars? If either of the two apply
to you, you will want to avoid a longer term car loan.
Even if you try and sell your car after two years of
ownership, but still have three years left on your loan,
you are going to lose money. How? Because you will owe
more on the car, than the car is worth. This is called
being upside-down on your car loan.
Interest rates associated with new car loans are lower
than used car loans. So, in terms of saving money in
interest, buying new is usually a better
option. However,
buying a used car can save you money in different ways.
In addition, dealers have great deals on 'certified
pre-owned' vehicles. Buying certified pre-owned will
allow you to buy a high-quality used car with interest
rates similar to new cars. Click the link to learn more
about the
benefits of buying certified pre-owned cars.
Down payment education!
A good idea would be to use the
auto loan calculator
to see what effect different down payments will have on
your monthly car loan payments. For example, the
difference in a down payment of $4000 and $2000 may have
very little impact on your monthly payments. Learn more
about
auto loan down payments.
Credit tip:
Before applying for an auto loan, you should obtain a
credit report copy online. You want to ensure that you
receive the lowest interest possible by eliminating the
risk of the presence of misinformation present on your
report. Also, there are mean of
improving your credit score is you have no credit or
bad credit. If you have good credit and
are make a
late payment, you run the risk of
damaging your credit. |
