What To Know About Auto Financing

| July 22, 2014

What To Know About Auto Financing

Many people think of a loan as the first option for getting a new car. There are things to consider before you go car shopping. Each choice can mean the difference between getting a great rate and being denied when applying for financing.


Paying With Cash

Cash can be a good idea if you have the money to put into it. Don’t consider this option if this will take too much out of your savings. Some of the advantages are no monthly payments and no interest charges, and if you want to sell the car at any time, you can. By paying cash you may be able to negotiate a deal to get a lower price on the car you want. According to Cars.Com, this choice “can make it easier to sell the car.”


Initial Considerations

First, get your credit score. This figure determines whether you can get a lower interest rate as well as your chances of getting a loan. It might be a good idea to get qualified beforehand to prevent problems. This will allow you to know how much you can spend on your purchase. Before signing, check for hidden costs. Credit insurance may be required by the lender and comprehensive auto coverage. Look into the costs of having longer loan periods, with some being 48 to 60 months.



Leasing might be a good option for some people. This can be done through the dealership. While leasing costs less than loan payments, you will not own the car at the end of the lease. When the lease is over, you have to turn the car back in to the dealership. A deposit may or may not be required for this auto finance option. According to CNN Money, “leasing will generally cost you much more than simply financing a purchase.” Keep in mind that there will be a limit on how many miles per year you can drive. If you do a lot of driving, this might not work for you.



Selling an Old Car

If you have more than one car, think of selling the other one for a deposit. This can be done relatively easily. Set a good price and then advertise the car for sale. Advertising options include online and in the local newspaper. Word of mouth is another good way of getting the information out especially if you have a large number of family and friends. Try to have the car in the best shape possible to get the best price you can. People looking for a specialist who buys used cars soon learn how important this consideration is in getting a great deal.


Where To Go For Financing

Places to go for a loan include financial institutions such as banks or credit unions. The auto companies also offer financing through them for qualified buyers. Shop around for the best interest rates. Also check at the dealership for any deals and rebates that can be used when getting a car from a certain dealer.

Category: Finances

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