Car Finance
Car Finance represents one of the largest expenses consumers realize after financing a home. So, do you need to be that one in four car buyer who will pay $1,000 too much in financing costs? A recent car prices study by the Consumer Federation of America, a Washington, D.C. based consumer interest group, shows that consumers who obtain their car loan through the dealership (about half of car buyers) often pay additional fees totaling as much as $1 billion nationwide – without realizing they qualified for cheaper financing. What happens, the group said, is that a bank approves an interest rate, the dealer tacks on additional percentage points as a kind of service fee and then the dealer and lender split the difference. This applies for car finance through a franchised or non-franchised dealer.
Before any car finance, search road test data, model specifications, manufacturer, editorials, press releases, and of course the cost of car insurance. Using the power of the internet, you can search by any option on the car you’re looking for. Search engines give people direct access to all new car dealers. By advanced search, customers can specify the car and options they’re interested in, right down to the carpet mats.
Car leases have become a popular option for many motorists. Besides the lower monthly costs; there’s the added benefit of simply walking away from the vehicle at the end of the contract without the problems of selling or trading you face when you buy. Car auctions are a favorite with many shoppers who are looking for late model vehicles at bargain basement prices.
Go to your bank, go to your credit union, get on the Internet, and find out the lowest interest rate that you qualify for in a loan. If the dealer offers you a higher rate, go elsewhere. Customers can walk out the door, down the street and find their own competitive financing that can greatly reduce car prices. A cheap car finance is usually only a matter of the annual percentage rate (APR). It happens to be the name that is given to the total costs involved in the loan process. Those total costs being the rate of interest and other applicable charges.
Cheap car finance isn’t that difficult to find even in the currently depressed market, if you have a stable employment record, and you follow some basic rules. Finding a cheap auto loan is of course much easier if you have a good credit record. This does not mean that persons with bad or no credit can’t get a car loan, but simply that those with good credit are naturally preferred by banks and other lenders. When you apply for a car loan, you must be able to determine your credit worth. It’s always best to be honest and candid when detailing your personal and financial situation, since the lending institution will undoubtedly order a credit report.
Refinancing is one way to make a car loan cheaper. It can usually be done with the same or even a different lender. If you happened to have taken out a car loan when interest rates were higher, and now find that the rates have dropped, or if your financial situation has changed and making timely monthly payments difficult or impossible, then refinancing the car loan could be to your advantage.
A computer and an internet connection make shopping and comparing car loans easier and faster than ever before. By gathering as many car loan quotes as possible, you could end up hundreds of dollars happier. The same goes when shopping for car insurance. The more quotes you have for comparison, the more you can save.
Many car finance institutions offer guaranteed online approval, which makes it easier to avoid dealer financing that is notoriously expensive. In the past, the majority of people buying a car obtained their financing through dealerships. Although it is convenient, in almost all cases, car dealers tack on “points” (that they split with the lender) when they arrange the loan. Smart buyers are turning to online financing companies for their auto loans.
Buyers can submit one application through an online car loan broker. This broker will then match the applicants with the best possible lending solutions. The lenders will then provide a quote that shows the loan term, the interest rate, and other details of the agreement. After reviewing the quotes, the buyer can then select the best offer.
Never buy a car on a whim. An automobile is usually your second greatest expense (after your house). By having a pre-approval letter before starting your vehicle search, your position is much stronger when negotiating with salesmen and sales managers. Besides giving you an alternative to dealership financing, you will know exactly how much you can afford and avoid the temptation of the cars that are outside of your actual budget.
Some shoppers have poor credit or no credit at all. Because of this, the more traditional lenders may not approve their application. These customers will require the services of a sub-prime lender in order to obtain a bad credit car loan.
The sub-prime lender’s business is to finance bad credit car loans. Even with a low credit score, judgments, bankruptcies, or even repossessions, many people do get approved for sub-prime loans. Sub-prime lenders offering guaranteed car loans with quick car finance approval are found on the internet.
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