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Tips to Get the Best Deal on Car Loan

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You want to buy a new car, and you have already decided on the make and model. And although the price is a little higher than your established budget, you are sure you can talk it down. With that in mind, you head over to the dealership, all cool and confident. But before the negotiations can begin, the sales representative asks you a question you were totally unprepared for – “What sort of monthly payment would you prefer?”

Believe it or not, but most car buyers spend hours researching the perfect vehicle while ignoring the auto loan terms. However, getting the proper car loan is quite important – maybe almost as important as securing a good car for the automobile itself.

To secure the right car loan for your vehicle, keep the following tips in mind:

Get Pre-Approved for Car Loan

The process of financing a new vehicle is twofold – first, you negotiate the cost of the vehicle, and then you work out the loan terms. Your aim should be to get great deals on both, and for that, you must handle the two discussions separately. Negotiating both simultaneously is a mistake made by eight out of ten auto buyers. But when you’re pre-approved for a car loan, you get the opportunity to shop around for the perfect car loan. This spares you the hassle of having to make an on-the-spot decision regarding the purchase of your vehicle. Pre-approval means you’ll know beforehand the loan terms, the monthly payment structure, and the interest rate.

Consider Overall Costs When Acquiring the Loan

Car buyers focus mostly on the sticker price but the final price can vary wildly. To determine if you’re getting a suitable deal, you should calculate the true price. This is the entire amount you need to pay throughout your loan period. This amount fluctuates according to the time it takes you to pay back the money and the yearly interest rate.

Find Out How Much You’re Paying Each Month

This will determine whether you can afford the vehicle or not. You must be able to accommodate the monthly payment easily. The monthly payment is calculated based on the annual interest rate, the overall loan amount, and the time it takes you to pay back the money.

Check Online for Great Rates

You spend a lot of time looking for the best deal on your car loan, but all this time, the answer is right there at your fingertips. Simply use your smartphone to apply for a car loan online. More often than not, it’s fast, easy, and cheap. You will find plenty of car loan sites on the web, but do not seal the deal at the first opportunity. Shop around a bit and see which sites offer the lowest rates. Just like actual lenders, the interest rates can vary wildly online. However, they are generally lower than credit unions and banks.

Think Car Loan, Think Short Term

Why? Because a shorter loan means less expenses in the long run! The truth is, auto loans are becoming more expensive with time and average payments are also slowly increasing. To compensate for the rising costs, the tenure for car loans has become longer, averaging almost 68 months now. This does not bode well for car buyers. After all, nobody wants to stretch their car loan payments over a period of seven years. Longer loan repayment schemes do decrease your monthly payments, but they drive up your overall loan cost as a result. The additional time it takes to return the money can cost you hundreds, maybe even thousands of pounds in interest.

Now, that you know all these cool tricks, it’s time to hit the dealership and get your new vehicle after negotiating the terms of your car loan.

Latest Activity: Nov 15, 2017 at 2:04 AM

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