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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.


 

 

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