Looking to Finance a New Car? Read this.
Many people dream of having a new car. However, one of the biggest obstacles is the cost of cars today. Read this report to learn about the financing of autos, especially before visiting the showroom of an agency.
Article Summary
1. To finance a new car
2. The prior approval can be an advantage
3. Compare prices before financing
4. Loans from a dealer
5. Loans from a bank, credit union or a finance company
6. Loans against investment
7. The faster you pay the loan, save more
1. To finance a new car
Unless you belong to extremely small group of people who pay with cash will need to quickly become a consumer knowledgeable on the subject of financing if you think buying a new car. For most customers who buy a car for the first time, one of the higher costs of buying a new car is interest on the loan you need to make your purchase.
But there are several ways to finance a car, and if you know your options may well save money.
2. The prior approval can be an advantage
Like you want to pay the best price for a car, you must also compare prices to get the best option in the loan of his car. And the ideal time to learn either on a car loan is before going to buy it.
To obtain the prior approval of a loan before starting to seek an indictment is tantamount to buy with cash. You can take the car immediately from the agency without having to wait until the loan is approved and disbursed, and bring the check back to the agency. In most cases the loan may be approved by its lending institution in a couple of days.
3. Compare prices to finance
All lending institutions are not equal. You can save hundreds of dollars when comparing prices to find the best offer of financing. Before signing any document, talk with several lending institutions to find out what their current interest rates on the loan.
Then find out if an agency of dealers can offer a better rate of interest.
Even if you get a low rate, perhaps a promotional rate, keep cautious when the seller starts to propose funding options.
You probably do not need the extra life insurance or accident insurance and supplementary medical insurance, or coverage of anticorrosive and extra-base paint.
4. Loans of an agency
Here the key word is convenience. Because many car companies have their own lending institutions affiliated as GMAC (General Motors Acceptance Corporation) you can select a car and a loan for the car in the application process. The process is usually faster to apply for a bank loan, and the agencies accept more easily than banks to buyers with credit reports that are not as perfect as they should.
They also help those customers generally with special needs, such as those who buy for the first time and new college graduates. And best of all, car companies sometimes offer promotional financing at a rate low on certain models. (But do not expect funding cuts in popular models).
The drawback? The funding agencies dealers may be more expensive, especially for buyers very poorly informed. (Agencies can sometimes earn so much money in financing and in the sale!)
Negotiate the price of the car before talking about the terms of a loan to the concessionaire can not raise the price of the car before giving a loan at an interest rate low. Even if you get a low rate financing of the concessionaire, from 2% to 5%, there may be a trap: these loans are generally short term. Because many must be paid in 24 months, the monthly payments would be overkill.
5. Loans from a bank, credit union or a finance company
Banks and credit unions generally offer fixed interest rates that are not negotiable and are often less expensive than financing agencies dealers. (They are also less likely to want to push for unnecessary life insurance credit, which guarantees that the loan will be paid if you die prematurely).
The membership of credit unions that offer car loans are usually offer lower interest rates that banks and finance companies. But the finance companies - often the most expensive of all - could approve borrowers who are higher credit risks.
In 1991, the Internal Revenue Service (IRS) eliminated the rebate of income tax for interest on most personal loans. The most important exception is the interest on a mortgage loan, which is tax deductible in a lump sum of up to $ 100000 no matter how you spend that money.
Some banks now offer loans for "tax smart" to return to consumers the discount auto loan. A loan tax smart combining ease of a regular car loan with the ability to tax rebate of a mortgage loan.
With a loan of intelligent taxes you do not have to go through the process of closure and costs required for a regular mortgage loan. And you can usually borrow up to 100% of the value of your home. Unlike a regular mortgage loan, the primary collateral on a loan of taxes is the smart car.
To receive the benefits tax, a levy is placed on the house.
While the loans may be tax smart smart for the bank that offers a business might not be so good for the person requesting the loan. A loan is tax smart insurance for the bank to do so has the collateral security both of his car as his home.
The bank generally burden the same rate of interest on a loan of intelligent taxes in a regular car loan which could be considerably higher than the interest charged on a mortgage loan.
Not only you are compromising the value of your car and your home for this loan but the savings you seen in your tax deduction would be smaller than the money they save with a loan at a lower interest rate.
6. Loans against investment
Another option is to borrow money at an interest rate attractive with a flexible payment plan, against a portfolio of securities, a savings account or a life insurance policy from a cash value.
7. Much faster pay the loan, save more
If you take a loan for a car, get the shortest time payment you can comfortably cope. While the monthly payments would be lower by extending the payment period, only a lower interest rate, a smaller loan or a shorter period could reduce the total expenditure.
For example, a loan of $ 15000 to 8% for five years, would cost $ 3240 in interest. You save $ 672 if they pay the extra amount of $ 62 per month for a loan from the same size of payments over a period of four years. The total cost of interest would drop to $ 2568.
Résumé
• When you have a loan approved in advance, it's like to buy with cash.
• Talk with several lending institutions such as banks, credit unions, or finance companies.
• If you discover a lower interest rate for an agency of dealers, make sure it is not a promotion that requires insurance or extra services, such as anticorrosive.
• By accepting a loan, get the shortest time payment you can comfortably afford.
• You could borrow against their investments, savings account or the cash value of life insurance and take advantage of interest rates and attractive payment terms.
Checklist
• Ask your bank or credit union if account owners are eligible for car loans at low interest.
• Read carefully any financing agreement before signing it.
• Before committing to a loan, consider hiring a professional mechanic to inspect the car that you plan to buy.
• Compare the best prices of cars as well as the best contract funding. There are many tools on the Internet that can help.
Before we begin
• assess the price of your home to know exactly how much you can decide to spend.
• Remember that the price tag of a car does not reflect the full costs of owning a vehicle financed.
• Ask yourself if you really need a new car. If the car you have at the moment is reliable and efficient fuel, keep it may be an intelligent measure.
• Make a list of the functions of the vehicle that you really need. Forget the expensive extras.
