AUTO LOAN TIPS

Only if you've got cash to throw around, purchasing a vehicle outright is not realistic for most Americans. Taking out an auto loan for assistance in the financing of your new or used car is very popular. Below are some tips that will help you get the best loan for your money with minimal interest rates and costs. As a responsible car buyer, you'll want to check out the 'how much to spend on my new car' section.

Understanding the Difference Between Car Loans vs. Mortgages
You want to purchase as much house as you can when buying a home. As a result, leaving the least amount of money possible as your down payment is not a bad idea. The value of your home is likely going to appreciate over time. However, the value of your car depreciates the second your drive it off the dealer's lot. Therefore, when utilizing a car loan, your goal should be leave the most significant down payment possible. Doing so will equate to you having to borrow less and deflect any hit from depreciation.

Understanding Auto Loan Interest Rates
No matter if you are buying from a dealer or private seller, you are always going to want to do research by comparing auto loan interest rates from multiple sources. You would be surprised at how rates and terms will vary from lender to lender. Sites like BankRate offer comprehensive and up-to-date information for interest rates of all the top banks and lenders.

When purchasing an automobile from a dealer, you do not want to discuss the need for financing only until a final price has been discussed and agreed to. If you do mention your plans to finance to the dealer, they are likely going to jack the price up on you. Same as with any plans of trading in your old vehicle. Don't mention only until the deal is done for the same reasons. Car dealers are very aggressive...always looking to get as much as they possibly can out of you. Most commonly by raising the price on your purchase any way they can.

Understanding the Varying Lengths of Car Loans
The amount of time you utilize a car loan for is an important decision. Typical car loan lengths range from 36 - 72 months (3 - 6 years). The longer financing term you select will equate to lower monthly obligations. BUT...you are going to pay significantly more in interest over the duration of the loan as a result!

If you find yourself trading your car in every couple of years then you should probably steer clear of longer term auto loans. Even if you attempt and sell your vehicle at the conclusion of two years of owning and you still have a few years left on your loan obligation, you will lose significant money. Why? You will be up-side-down. Meaning that you will owe more than the car is worth.

Interest of New Cars vs. Used Cars
New auto loans have lower interest rates when compared to used auto loans. Therefore, if you are looking to save in interest payments, consider buying a new car. But, you may be able to purchase a 'certified pre-owned car' which will equate to being able to buy a used car with interest rates close to those of new car loans.

Getting a Copy of Your Free Credit Score
Prior to submitting an application for any type of car loan, you should click here to get a free copy of your credit score. You want to check your complete credit profile so that you can ensure that all of your information is accurate and current. Having errors on your credit profile may not only negatively effect the interest rates you receive for you auto loan, but may even jeopardize your ability to achieve approval. Learn more about the value of getting your free credit scores.

Car Buying Mistakes to Avoid
Benefits of Buying Used
Getting a Car Loan With No Credit



 


 

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