Auto Loans

you are buying a brand new car or a used one, chances are you will need an auto loan these days. The price of cars have made it pretty much impossible to avoid an auto loan, yet most people spend more time negotiating the price of their car than they do negotiating the loan they are about to take. The price you pay for your car is important, but then so is the interest rate, the term of the loan and the amount that you will pay down on the car before you drive it off the lot. The cost of your brand new car is actually the price you negotiated, plus interest that you are going to pay and plus any fees involved for setting up the loan by the dealer or the bank.

Considering The Interest Rate
A couple of points that many people should take into consideration will be helpful at this point. Did you know that the only difference between a new car loan, a used car loan, a car sales loan, and any other type of loan associated with autos is the interest rate and terms that you are going to pay. Always compare terms and interest rates. You may just find that, the new car loan special is more expensive than the rate you might be able to obtain at your local bank. Dig into the details and understand what you need to look for before you sign on the dotted line.

Two Agreements In One – Auto Purchase and Auto Loan
We will discuss loan details in a following paragraph, but first did you know that when you purchase a car you are actually doing two deals and signing two separate sets of papers. The first set is were you take ownership of that brand new car you are so enthusiastic about. Next unless you are paying cash, you need to sign a loan agreement, which often assumes your new car as collateral. This agreement states how much is being loaned, the interest rate, how often the interest rate is calculated, how many years it will take you to repay the full auto loan and finally the monthly payment!

Don’t Focus On The Monthly Payment
Many people will focus on the monthly payment, however if you stretch your loan out, your monthly payments will decline, however you will actually be paying more interest over a longer term and as a result your new car will actually cost you much more than you thought. A good rule of thumb is negotiate the lowest interest rate you can possibly obtain and pay the loan off as quickly as possible to decrease the total cost of the loan as much as possible.
Compare The Dealerships Loan Agreement, Interest Rate, and Term, With Your Banks Deal
Many car companies will advertise loan sales associated with new cars, end of season cars etc. sometimes these loans are actually quite good, however you will never know until you do a little comparison. Our suggestion is first negotiate the best price you can and the best loan deal you can through the dealer. Before you sign on the dotted line, take the loan proposal to your local bank that you deal with and speak to the loans manager. The worst that is going to happen is they cannot beat the deal, the best that can happen is that they can. Even if you are able to shave $25 a month of the cost of the loan, that is $1500 over a five year loan in savings. I don’ know about you, but I can sure use $1500 in my pocket!

Don’t Let The Auto Dealership Or Salesmen Rev Up Your Engine
Emotional excitement is a wonderful thing and there is nothing more exciting than picking up your new car from the dealer and driving it home for all of your friends and family to admire. The dealers know this and they will gauge the deal they offer to you by the level of excitement or desire that you demonstrate. Many dealers can read a client like an open book and will use this information to strike a better deal for the dealership. There are ways to turn the tables and get a better deal. Remember if you drive the cost of the car down, then your auto loan monthly payments will be that much lower. So how does one go about negotiating a better deal?

Always Comparison Shop Dealership Financing & Loan Agreements
Start with selecting a car that you are interested in purchasing. Negotiate the best deal you can and then just walk out of the dealership telling them that you need time to think about it. Next go to another dealer and see what kind of deal you can get from a different dealership for the same car and do the same thing. Now you have two different deals, which may be the same or one may be better than the other.

Timing Can Make A Difference When It Comes To Auto Loan Agreements
Your next visit to the dealership should be close to month end, year end if possible, when the dealers are hungry to close deals. In fact go on a Saturday afternoon just before they are ready to close. You need to be ready to deal at this point and you basically let them know if they can provide you with a better deal than the one you already have, then you are willing to buy. This is one of the best ways to drive the cost of the car down and the monthly payments on your loan down as well. Even $5 a month adds up to $300 over a 5 year loan!

Auto Loans In Summary
In summary, keep your emotions in check, be patient, comparison shop for both cars and auto loans, shop for the lowest interest rate available, and pay off your car loan as quickly as you can to reduce the total cost of your new car!

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