Auto Finance: What You Should Know About Car Financing
If you’re no professional at financing cars, it can be a confusing process, but you don’t have to be an expert at it to get a good deal. Here are a few things to keep in mind before you start the bargaining process with the car dealership.
Make a Large Down Payment
You will end up saving money in the long run if you provide a large down payment. Not only will this take a big chunk out of the total amount owed on the vehicle, it will also reduce the number of monthly payments that you will need to make.
The Sticker Price
The real price of the vehicle isn’t always what you see on the sticker. Unless you buy from a “no-haggle/no-hassle” dealership that won’t budge on their prices, the car dealer expects you to negotiate the price, so be sure that you do! Whether it’s Overland Park Mazda or a local Toyota dealer, the dealership wants you to buy from them. If you go to the dealership with the intention of leaving with a car, they will do what they can to make that happen. Negotiate!
Avoid No Money Down or No Interest Tactics
Most dealers try to lure unsuspecting customers in by offering to delay payments and interest for a certain amount of time. It is also a common practice for dealerships to offer cars for no money down. However, this tactic will cost you more money in the end. After the delayed payment period ends, your payments will be much higher than you expected. This is because after the “no payments, no interest period” is over, you still owe the same amount for the vehicle, except now you have a shorter amount of time in which to pay it.
Don’t Expect to Receive the Advertised Financing Plan
Most of the time, dealerships will advertise financing rates that only apply to people who have excellent credit. This means that you will end up being offered financing that is much higher than what you saw in the advertisement. Instead of accepting the financing offered by the dealership, try to find cheaper alternative loans from a local credit union or bank.
Opt for Shorter Payment Terms
It may be tempting to opt for a longer repayment term on your auto loan, but it is best to choose the shortest term possible. This will reduce the overall amount of interest that you will have to pay, even though your monthly payment amounts will be higher.
Look out for any hidden extra costs on the final bill when you buy a car. Look for things like fabric protection, tinted windows and rust protection. If you don’t want those things, make sure you cross them off of the invoice. Most cars already have a factory warranty for rust protection anyway, so you don’t need an additional charge for it by the dealer. Dealerships make a lot of money by adding on items that might look important on the bill, but they really aren’t. If the dealer tries to tell you that everything comes with the vehicle, just walk away from the deal, or tell them to find a car for you without all the added extras.
Before you actually finance a vehicle, make sure you have a good understanding of the many issues involved with financing. Even without being a financial expert, by following some of the above guidelines, you can get a good deal when you go to finance your car.