As more people in the U.S. struggle to pay their car loan, buyers need to be more aware of how to get lowest rate possible going into the contract. Here are eight tips to finance for a better car, without getting yourself a huge car note.
Don’t Assume the Dealership’s Financing is Best.
It may not occur to a lot of consumers that there are other options besides the dealership’s bank to finance your car. Check interest rates at your local bank or credit union and compare notes before you sign on the dotted line with the dealership. The shopping around can prompt the dealership to give you a better offer or you can just go with the best deal.
Do Your Research Before You Go to the Dealership
If you have no idea what kind of car you want or how much cars cost in general, a sales rep can offer you anything. Decide how much you want to spend and search for vehicles in that price range. Check different resources and compare them to KBB cars for sale. Then choose what make, model, and year of car you are looking for before you set foot in the showroom. Search for those cars online to check out the price range and go into the dealership ready to share your numbers.
Cash is Still King
When you have an idea of the make, model, and year of the vehicle you want, begin saving for a down payment. The more that you have, the more flexibility you have in negotiating the length and amount of your car loan.
Consider Trading in Your Current Vehicle
Trading in your current vehicle will take some of the sting out of the sticker price. If your car is in good condition and doesn’t have too many miles, you can use it toward the purchase of a new car. Make sure you have an idea of what your current car is worth so that you will know if the price the dealership is offering you is too low.
Don’t Accept ‘The Bundle’
Car dealerships will usually give you an offer in one large amount. But experts say you should ask to see everything separately. Ask for a breakdown of the price that includes distinct sections, which can include the sticker price of your car, the financing package, and the value of your trade-in. You also want to see a breakdown of the price to see what the extras cost and decide if you really want or need them.
You Don’t Have to Get It Loaded
While on the subject of extras, consider that you will have to decide what’s more important: a loaded car or a quality car. If you can’t afford both, go with the quality and skip the extras. Ask for the standard package, though you may be surprised what standard features look like in today’s cars. For example, bluetooth capabilities were once a luxury but now nearly every car has them.
Always Check the Details of the Deal
Work out the math on the details; experts warn that what sounds good isn’t always the better deal. A dealership may offer a choice between zero percent financing or a rebate, but you need to turn the offer into real numbers to compare. In the same regard, avoid long-term loans because the lower monthly payments may look good, but you’re paying more interest over time. Finally, you want to check what the penalties are if you pay the loan off early or what fees are in place if you miss a payment or pay late. You don’t want to get caught off guard by extra fees.
Take Someone With You
Take a spouse, friend, or family member who knows what kind of vehicle you want. It would be even better if the person you take knows something about cars. You can discuss any offer you get with them so you can settle on the best deal.
Don’t be afraid to ask questions, especially when you are making such a large buy. Thorough research can get you the car that you always wanted — without the car note that you have always tried to avoid.
Image via Flickr by brianteutsch