By: Sarah E. Sanuth, is an insider in the automotive industry with many years of experience in the car dealership and repair business, is guest contributing an article sharing her insider’s perspective on car financing.
When many of us purchase a used vehicle, we look for financing. However, we don’t always consider all our options and sometimes just go the quick and easy route, even if it means costing more money. But looking for the best car financing doesn’t have to be difficult.
First and foremost, know your credit score. Most lenders look at just your scores, rather than your credit report as a whole. If you don’t know your scores, spend the few dollars and obtain them.
Starting your auto financing search prior to purchasing a vehicle will give you plenty of time to research and compare, and prevent you from making a hasty decision.
Perform an internet search for “car financing.” This will bring you to more than enough lenders to complete the search, but don’t forget your local banks and credit unions. Check and compare all interest rates; a site like Bankrate.com has helpful comparison information. Choose at least the best two lenders from each type of lending institution. Once you have all the rates and terms, compare them side by side.
Other than interest rate, there are other key items to consider, some of which will affect the interest rate you are going to receive.
Typically, the longer the term the higher the interest rate, this will also affect your monthly payment. Before getting set on a certain interest rate or term, make sure you can afford the payments.
0% Financing or Rebates
Don’t get your heart set on getting that 0% interest rate. To qualify, you usually need a credit score of at least 680 and have to take the shorter financing term, which increases your monthly payment. If you take the rebate over the 0% interest rate, it decreases the amount you are financing. This in turn, could lower your monthly payment and decreases the overall cost of the vehicle. Edmunds.com offers a calculator to help you determine whether the lower interest or the rebate is best for you.
The amount in which you put down on the car purchase can affect the term, interest rate and monthly payment. Make sure that your down payment will adequately benefit your financing needs.
Extended Warrantees, Rust Protection, Undercoating, etc.
When you include any of these extras, it is rolled into the overall amount you are financing. You don’t have to purchase these items through the dealer, shop around and read the fine print. If you want to include these items, try to negotiate as they are often marked up. Otherwise, almost anyone can apply these items to their vehicle for a fraction of the price.
Before you Sign
Make sure that all the terms that you worked out are written in black and white and there is no deviation from what was discussed. Take the time to read every part to make sure nothing was slipped in. If something isn’t right, don’t sign until it is.
A lenders website will usually list all the terms and conditions of obtaining a used car financing. Make sure you read all the fine print before proceeding. Above all else, make sure you compare all the terms and conditions of a loan to ensure that it is something you can afford, and live with.