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Tags: finance, auto loans, find a car loan
 If you’re going to go and buy a vehicle, be it a sedan or an SUV, unless you’re paying in cash, you will have to make auto financing arrangements—get a car loan. Your credit history along with the amount of your down-payment affects the car loan interest rate that you get which in turn impacts your monthly car payments.
If you're going the financing route it is often recommended you not to get financing through your dealership. Sure it’s convenient but more often than not they will usually have higher interest rates and less favorable terms. Even if they offer those 0% interest financing they inflate the price of the automobile that you will buy.
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Remember, dealers are out to get favorable terms so they can either sell the car loan to another lending institution or continue to collect high interest payments themselves. So how do you find a car loan for yourself? Simple-just do the research. Now don’t go shaking your head. It’s not as hard as it would seem.
It's easy to comparison shop-use the internet. There are websites that are readily available wherein you put in the information they request and they can give you quotes from different financial institutions that can give you a car loan. Check your own financial institution or bank. They may offer you a good deal and since they know you they are more likely to work with you to find you the best deal since they want to keep you as a customer.
But don’t be complacent once you find the lowest car loan rate out there. There are still factors that can affect it and your monthly car loan payments. Take for example the length of the loan—shorter terms tend to have lower rates but higher payments; conversely longer terms have higher rates but lower monthly payments.
The down payment that you make can also affect the interest rate. Typically a 20% down payment can give you a lower rate even if you have some credit issues. At the same time the amount of your down is subtracted from the price of the vehicle so you wind up financing a smaller amount resulting in a lower rate and monthly payment as well as the term of the financing.
Obviously the higher the down payment you can afford the better the terms you will get. The reason for this is simple—the less the financial institutions have to cover, the less risk they have so the more willing they are to give you the lower rates. More importantly, your credit score will have a major effect on your rates.
This especially true if you have a bad credit score. It doesn’t matter if you find a car loan with a low interest rate, the minute your bad credit report is brought into the equation expect your rates to go up. At the same time you lose your negotiating position.
Before you go out and buy your automobile look into your credit report. You may see discrepancies in that report that once taken cared of may actually better your history. At the same time try to better or maintain your credit report by making sure you don’t have a late or delinquent payment.
Do everything possible to not have a negative mark on your credit report. This is important especially in these times of economic turmoil since many financial institutions have tightened their lending requirements so borrowing will not be easy. And if you’re going through the dealer for financing don't fall victim to their high-pressure tactics and take their first offer.
This may be good for them but not for you. Negotiate and if you don’t come to terms always be prepared to walk out. Come with the best deal that you’ve researched and use that as leverage to get the best car loan available.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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