If you're a first-time car buyer, you may be wondering how you can go about obtaining the best auto loan. With so many financing options available these days, securing a car loan can be a confusing process. However, with a little bit of research and effort, you can be well on your way to obtaining the car loan that you need.
You should be aware of the fact that car loans are extremely common, about 70% of all new cars are financed. A number of used cars are financed as well. There are a large number of options for auto financing these days. For instance, you can obtain your loan from a bank, finance company, credit union, or even a professional organization that you happen to have membership in. It is also possible to obtain financing through the auto dealership. You may also decide to finance your car through a home equity loan, which can provide you with an exceptional interest rate.
Interest Rate Know-How
You should know at the outset that your interest rate may vary depending on whether your car is used or new. The interest rates for new vehicles tend to be lower than those for pre-owned vehicles. Also, loan terms tend to be more generous for new cars and trucks than for used models.
Lengthy Loans
If you have a particularly lengthy loan term, it will cost you more money in the long run. There is actually a trend nowadays for longer loans, some run as long as 84 months. This is because many people make the mistake of thinking that they can afford a more expensive car if the payments are spread out over a longer period of time. However, if you truly believe that it would take you seven years to pay off a car loan, you might be better off, financially speaking, opting for a less expensive vehicle. This may be particularly true, given the fact that a lengthy loan may require an incredibly high interest rate.
Tempting Incentives
There are some car dealers who claim that they will pay off the balance of your car loan, no matter what the amount of money left on it. However, if you agree to such a deal, you will simply be transferring your remaining balance onto your new car loan. This means that, if you're interested in purchasing a $19,000 car, but you still have $3,500 left on your current car loan, you'll be taking out a $22,500 loan in order to cover your expenses.
Such a program is not attractive in the long run. You would be much better off if you simply waited to pay off your outstanding balance before purchasing a new vehicle. If you simply cannot wait to buy another car, consider one that is more affordable. Otherwise, you could find yourself falling even farther down the economic ladder.
With some smart strategic planning, you can obtain an auto loan that will leave you in a good financial position in the years ahead. Considering the fact that cars tend to lose their market value quickly, a cost-efficient car loan may be one of the best financial decisions you'll ever make.
Rebuild.org brings you the latest news headlines related to Auto Loans:
- GMAC Uses Government Aid
GMAC is blanketing the auto loan news these past few weeks thanks to GM’s government financial aid. On top of that the US Treasury said late Monday it would purchase five billion dollars in shares of GMAC to help support the company seen as critical to the auto sector. The Treasury also announced a one-billion-dollar loan [...]
[January 7th, 2009] - The Hyundai Assurance Program
In a time of economic uncertainty car buyers are more leery than ever about buying a new car. Things like job loss, medical emergency or personal financial downturn weigh heavily on the minds of the average car buyer. Hyundai to the rescue, with the help of Walkaway USA, LLC. Hyundia introduced their assurance program that offers [...]
[January 5th, 2009] - $6 Billion in Government Money, Auto Loans and GMAC
GMAC’S receives $6 Billion in aid money from the government and you would think this would open the door to more auto loans to consumers. You might be right. In October 2008 GMAC changed their policy on the demographic to which they will lend their money to by raising the minimum credit score for an auto [...]
[December 31st, 2008] - Automaker Loan: Opinions and Projections
When GM and Chrysler first approached congress about their cash crisis and looking for financial support, Americans overwhelmingly opposed the idea. Times have changed, Americans are now in full support of the idea and have a 63% approval rate on the $13.4 billion in aid and 65% think that a bankrupt automaker would further damage [...]
[December 23rd, 2008] - When the Fed Lowers Rates that Means Lower Interest Rates, Right?
Is normally good news to have a lower Fed Funds Rate because it is good for consumers, since car loans, student loans and credit card rates are influenced by the prime rate, which is generally 3 percentage points higher than the fed funds rate. The global financial crisis has left banks weak and with little appetite [...]
[December 17th, 2008]
