Seven out of ten cars that are purchased today are done through an auto loan. In order to be successful you have to know what you're doing BEFORE you start so you don't end up losing your shirt. The most common sources of getting loans are through their bank, credit union, or other institutions.
These sources usually allow you to have the loan pr-approved before you step into the show room. If this is the case it helps you know your reasonable limits before you start to negotiate. If you own a home, your bank may allow you to take out a home equity loan. This will allow you to tap into your equity that you have in your home. The interest rates are lower and your payments may be tax deductible. The obvious risk to this is the risk of potentially losing your house if you default on your loan.
Make sure you don't place yourself in a position of unnecessary risk. Read the rest of the article to learn how to make your shopping for your auto loan more reasonable and ultimately safer for you. New car verses old car? It really depends on your needs and your wants. A newer car will most likely have lower interest rates than an older car. Also consider in your equation that an older car will most likely have more repairs and maintenance than a newer car. You can also try to get the loan directly through the dealer's credit department.
It will most likely cost you more, but this may not always be the case depending on who you are dealing with. Don't be fooled or dazzled by the numbers the dealers throw at you. Here's what you'll need to know: Your trade in: Sell it personally and don't trade it in. You'll get less for it if you trade it in. If you do decide to trade it in at the dealer make sure you don't tell them until the very in. Otherwise they'll internally adjust their offers to make them even more profit while giving you the impression that they are "helping" you.
Length of the Loan: this varies. Some institutions are offering seven to eight year loans that usually charge more interest than the shorter three or four year loans. Take that into consideration as well.
You don't want to end up paying $40,000 dollars for a $12,000 car that at the end of seven years will be worth $2,000. It makes sense to calculate the length verses the potential value. Here are some important things to remember when purchasing your new car: (1) Knowing what your credit report says about your credit history. (2) Identifying what kind of car you actually need. (What you can afford).
(3) Shopping around to get the best deal. The auto dealers vary in price and service. (4) Knowing the "real" final cost of the car.
(5) Making prompt payments on your car once you have purchased it so you can build up your credit rating.
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