Whenever you go to a car dealer to buy a car, whether it's new or used, the dealer will probably also have different financing options to help you pay for the car. Even though these may seem very appealing, especially if you can't afford to buy a car outright, you should always check twice to make sure you aren't getting ripped off or taken advantage of.
The most important thing to know when a car dealer offers you financing is that you don't have to use them. There are a lot of different places, like banks and other lenders, that will give you the money you need to buy the car. If they don't want to give you the money you need, it might be a sign that you can't afford the car and should look for something cheaper or wait until you have a bit more money saved up to buy it.
A lot of times, car dealers will have offers for car loans that look a lot better on paper than they really are. For example, before you think about taking out a loan, you should always ask how much the car would cost if you paid cash. This may show you a hidden extra cost of the credit. For example, if the car would cost $10,000 with credit but only $8,000 with cash, this immediately shows a $2,000 financing charge that you may not have noticed or figured into the cost of the credit. If this were the case, you could borrow the $8,000 from your bank and pay cash for the car, taking advantage of the better price.
Always ask the dealer what the APR, or annual percentage rate, is. This is the standard way to figure out how much credit costs, and you can use this number to compare how much other offers cost. Find out how many monthly payments you will have to make and how much each one will cost. Will you have to pay a down payment at the beginning of the loan or a closing payment at the end of the term? Car loans can be very expensive, so it's always a good idea to ask these questions and make sure you get the best deal you can.
