Getting a car is an exciting prospect. There are so many choices, and between the wide array of vehicles, there is literally something for everyone. One of the biggest parts of a vehicle purchase is financing. Most people can’t afford to pay cash for a car, truck or SUV. That means financing – otherwise known as getting a loan – is the only option. If you’re ready for your next ride, here are some tips to get the best auto financing possible.
The Top 7 Tips for Finding the Best Auto Financing
When you’ve found the ideal potential vehicle and it’s time to sign a contract and secure a loan, make sure to take into consideration these 7 money-saving tips that can also keep you safeguarded:
- Realize you don’t have to finance through the dealership – Many dealers like you to believe that you have to finance through them. They have an office you’re whisked into, and then you sign on the dotted line. The truth is, you can actually secure outside financing if you want to—before you even go to the dealership. You may be able to find better rates and simpler loans outside the lot. If they tell you that they won’t take “outside financing” you may want to question why that would be. Most dealerships aren’t going to turn down a sale.
- Comparison shop – You most likely wouldn’t buy the first car you see, so why would you choose the first loan you are approved for? Try comparison shopping. You’ll likely save money if you can find even one lender who will offer one point less of interest. When you calculate it, that one point adds up to a substantial amount of money. The Internet makes it easy to comparison shop.
- Know how your credit score affects interest rates – You should understand what your credit score means in terms of rates and the ability to get a loan. Sites like Credit Karma, and articles about financing and scores are helpful tools that let you know when you’re getting a good offer and when you’re not.
- Don’t focus only on monthly payments – When securing your financing, you’ll want to look at the whole loan picture and the vehicle itself, not just your monthly payments. You want to make sure you are getting the best vehicle for your money, and the best rate for your credit. If you start with what you want your monthly payments to be, you may get trapped into a bad situation. Start with selecting some vehicles and doing the research on them. Then make sure you aren’t getting taken advantage of (in other words, research value and vehicle reliability). Lastly, choose the one that works best for your budget, but also meets your needs. Remember, the cost of a car isn’t only monthly payments, but insurance, repairs, maintenance and gas as well.
- Understand your loan documents – How many people sign contracts without ever really reading them? Nothing is more dangerous than entering a contract without understanding it. If you have a hard time with legal jargon, there are plenty of places that can help you, or bring a trusted friend or relative who has confidence with contracts. You want to make sure you are putting your name on something that doesn’t take advantage of you.
- Let the dealership make an offer – Just because you may be pre-approved when you walk into a dealership doesn’t mean you shouldn’t see if the dealership can offer you something better. Don’t tell them you’re pre-approved—instead, let them present their offer. Then you can select which loan is truly the best.
- Maximize down payment and minimize terms – The less time it takes to pay off a vehicle and the more you can put down, the better off you’ll be when trying to save money. Plus, a longer term puts you more at risk to have an upside down car loan.
The more information you have and the more of these tips you can implement when getting a car loan, the better off you’ll likely be in the long run. Remember that a car is not just an everyday purchase. It’s something you want to consider carefully so you can get the most for your money.
