When buying a new car, you have to do more than just decide what kind of car you want and how much you want to pay for it. If you don't have a lot of cash saved and can pay for the car all at once, you will have to choose a way to pay for it.
Before you choose a company to finance your car, you should compare prices and rates. Even though it's easy to have the car dealership set up your loan and payment plan, this isn't usually the best choice. A dealer will send your credit information to several lenders, but that doesn't mean you're getting the best deal. The main goal of a car dealership is to make money, so they will choose the lender with the best commission. But their pay depends on how much interest you pay.
Banks, credit unions, and other types of finance companies do business with car dealerships. Your interest rate can go up because the finance company lets the dealership do so. In exchange for your business, the dealership keeps the extra interest you pay. The dealer makes money, the lender gets the original interest rate they asked for, and the customer pays too much in interest charges.
Online Lenders Offer Low Interest Rates
One of the best ways to get a lower rate on a car loan is to apply for it online. The best way to get a low interest rate on a loan is to have a good credit history, which all lenders will check. The next best thing is to get a loan online. You save the lender time and money when you apply for a loan online. The savings made on business costs are given back to the customer.
When you apply for a loan online, the lender will usually want you to sign up for a plan to make payments automatically. After you fill out a form, your car payments will be taken out of your account automatically. So, the lender doesn't have to deal with as much paperwork, and the loan payment is always made on a certain date.
Don't let salespeople push you.
Even if you've already been approved for a car loan, don't let a pushy salesperson convince you to buy. Many will come up with excuses to get you to buy the car right away.
If they're willing to give you a deal on a car today, there's a good chance they'll do the same next week. Before you choose a car and sign the loan papers, make sure you like both the car and the terms of the loan.
