Buying a vehicle outright is not likely possible for most consumers, and quite frankly, really is not practical. Taking advantage of an auto loan is probably going to be your best option when buying a new or used car. Featured below is information that will help you get the most car for your money and the best interest rates for your financing.
Mortgages and Auto Loans are not the Same!
When in the market for a new home, you should like to buy as much house as you can. It is not a bad idea to leave as little of a down payment as you can. Dissimilar to cars that go down in value over time, otherwise known as depreciation, the value of most homes and properties rise in value.
On the contrary, when you finance an automobile, you want to put down as much money as you can afford for your down payment. This will result in you borrowing less, as well as avoiding owing more for your car than what the car is worth (otherwise known as being upside down on your car loan) because of new car depreciation.
Understanding Interest Rates
No matter if you are buying a car from private party or from a dealership, it is always a good idea to compare auto loan rates from several different banks and online sources. New car loan rates are generally lower than rates associated with used cars. However, you can save money by buying a ‘certified pre-owned’ car. Buying certified pre-owned will allow you to buy a high-quality used car with interest rates similar to new cars. Also, if you are buying a car from dealer, interest rates will be lower than when buying from a private party.
It is important to understand that if you have poor credit, or no credit, interest rates you receive are going to be higher than if you have good credit. However, if you can maintain a positive payment history for your auto loan, you can consider refinancing at a lower rate after a year or so.
**When purchasing a vehicle from a dealer, never discuss your need for financing until a final sale price is agreed upon. Dealers will always look to squeeze every penny out of you. Mentioning your need for a car loan will most likely result in a higher sale price.
Auto Loan Terms
Car loan terms generally range between 36-60 months. Your monthly payments will be lower the longer your finance your car for. However, the longer your car loan term is, the more money you will end paying in interest over the entire span of the loan. As a result, choosing the length of your auto loan is going to be very important.
Also, if you like to trade your vehicle in, or sell every few years, a long auto loan term should be avoided. Why? If you have three years left on a five year loan, you will lose money as a result of owing more than the car is worth.
In conclusion. . . .
The decisions you make when buying a car will either save you money, or make you lose money. You need to do your research, remain calm and never buy on impulse or be forced into purchasing a car that you do not really like.
Jacob Joseph is a financial expert for http://www.starloanservices.com . At Star Loan Services you can apply for a
bad credit auto loan for purchasing from a dealership or private party.