When
buying a car, most people spend weeks - or even months - searching for the best
car for their money. Once they decide on
the type of car they want, they spend another few weeks looking for the best
deal. They check out different auto dealers and look into private sellers. But one thing people tend to forget about is
the auto loan. If you get a great deal on the auto, it only makes sense to want
the best deal on the loan, too. Here are some tips:
Don't sign up for a dealership loan Come prepared and have financing
already in place before stepping foot into the dealership. Dealerships
typically have higher interest rates and can even mark up those already high
interest rates, costing you even more money long-term.
Get the shortest loan-term length
possible The longer
the term, the higher the interest rate. Most offer 0% financing on very
short-term loans, such as two years. Some offer 0% on five-year loans though,
so make sure to do your research. Note:
Zero-percent financing is mostly for new cars only.
Don't buy too old of a car New cars depreciate the second you
drive them off the lot. That being said, the older the car you buy, the higher
the interest rate on the loan. If you want a new car make a significant down
payment so you are not upside down on the car value once off the lot.
Improve your credit The better your credit rating, the
better interest rate you're going to get. Pay down credit cards, always pay on
time and dispute or pay off old accounts that have gone into collections.
Shop around Check out different banks, credit
unions, dealerships and websites. Ask questions about late penalties or potential
hidden fees.
Work quickly Every time you apply for a loan,
your credit score goes down. Though it doesn't go down significantly, it can
add up - especially if your credit is less-than perfect to begin with. Keep in
mind that you can apply for as many loans as you'd like as long as it's within
a two-week time period. If every application falls within the same two weeks,
your credit is only hit once.
Do your homework Take the paperwork home and read
all the fine print. Know exactly what you're getting yourself into before
signing anything.
About the Author: Sarah Brooks is a
freelance writer living in Glendale, AZ with her husband and daughters. She
writes on personal finance and small business.
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