Getting a good deal on a car loan
If you are intending to purchase a new car, the chances are that you will also be searching for a good deal on a car loan. Purchasing a new car is expensive, so while searching for a good deal on a car loan may not be as much fun as searching for the car itself, it is just as important.
One of the ways of securing a good loan is to ensure that you have a good credit rating. The first thing you should do is check your credit rating. Look through the details of the report and dispute any information that is incorrect. You should also close any old accounts that you no longer use. Pay off your debts and make sure that you do not owe any money on your credit cards.
Even if you do not have a good credit rating, you may still be able to get a good deal on a car loan. Use the internet to shop around and compare offers from different loan companies. Before you even set foot in the car dealership you should have your finance approved. This will enable you to compare the rate the car dealership may offer you with your quote, and you can use the fact that you already have finance in place to drive a harder bargain. Remember that a car dealer will try to sell you the loan that makes them the most profit, not the one that is best for you.
Once you have decided to purchase a car, the finance office will try to add many extras, such as extended warranties, rustproofing and other items. It can be difficult to know if you need these additional items or not, but remember you can buy them after you have purchased the car, so do not be swayed. Never take delivery of your car until the financing has been finalized. Some car dealers will lead you to believe that you can take the car home straight away, by offering conditional financing. However, days later they will contact you to say that the financing fell through and you have to pay a higher interest rate.
To get a good deal on your car loan, negotiate a short-term loan. Car dealers will try to get you to spread payments over many years to maximize their profit. Instead, try a company such as Amscot Financial, which specializes in short-term loans. The shorter the term, the less interest you will pay and the less your car will cost you. Ian Mackechnie, Chairman and CEO of Amscot Financial, used to run his own bakery until he realized that there was a need for a check-cashing company.
Short-term loans can boost your credit rating, but you need to ensure that the loan is paid off in full and on time. The value of any car depreciates with time, so paying off a car loan over many years does not make good financial sense.
Purchasing a new car is exciting, but do not let your emotions rule your decisions. The price of the vehicle, the trade-in value and the financing should all be viewed as separate transactions. Having a loan pre-arranged can make it easier to haggle over the other two.