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Are Auto Loans Through A Car Dealer A Good Idea?

The average cost to own a vehicle these days – including monthly payments, gas, insurance and maintenance – is over $10,000.

It is a hefty amount to put out each year, considering a vehicle is one of the worst investments a person can make. Unlike other investments, such as real estate, vehicles depreciate in value every year. From the minute you drive off the dealer’s lot, you’re vehicle already has lost about 10 percent of its value.

Knowing the facts and figures about owning a vehicle doesn’t stop people from having them. With public transportation in some areas lacking, vehicles are required to get around.

For most people in the market for a new or used vehicle, securing a loan to help finance the purchase price is necessary. While most auto dealers offer on-site financing as part of the convenience of doing business with them, it may not always be the best idea to opt for this kind of financing, as it usually is the most expensive option.

Auto dealers account for the source of nearly 80 percent of all new vehicle financing. But while auto dealers have a variety of financial institutions available with which to broker you the “best” deal, they also tend to add on hidden fees to earn a little extra money on the side for offering that convenience. Car dealers, by law, are permitted to tack on as much as 3 percent in fees to any loan it helps to secure for its clients. Many vehicle buyers are unaware this occurs, and assume the rate they are getting is based solely on what the financial institution offered the auto dealer.

Car dealers also are not subject to the same rules and regulations as other financial institutions when it comes to lending practices. In 2010, Pres. Barack Obama signed into law new legislation designed to protect consumers seeking loans from financial institutions. The law is intended to protect the consumer from unethical lending practices. However, it does not extend to car dealerships. Auto dealers also are exempt from other important consumer protection laws such as the Truth in Lending Act.

The Better Business Bureau reports that car dealerships are the most-reported industry for complaints it receives from consumers.

So are auto loans through a car dealer a good idea? The answer is a resounding no.

The best way to finance a vehicle is by securing a loan before you ever set foot on a dealer’s lot. One of the best places to start is with online auto loan companies. They usually have access to many bank car loan rates and can automatically compare these and deliver you the rock-bottom best auto loan deal. If you are a longtime member in good standing with your local financial institution, you may also visit them to see what kind of interest rate and maximum amount you are qualified to borrow.

Financing outside of the dealership will not only land you a better deal in the long run, but it also will help you to determine whether you can afford the monthly payments in your budget before you even step foot on a car lot.

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The highest paid university vice chancellor in the UK received an interest-free loan of more than £31,000 to spend on a car, it has been revealed. Students at Bath University are outraged after Professor Dame Glynis Breakwell was given the loan as part of ...

Published:  Sun, 22 Oct 2017 05:29:00 GMT



Subprime conditions: Bad credit car buyers are getting the squeeze on car loans

Having trouble getting a car loan Don't worry - everyone hits a rough patch. But this time it may have less to do with that late payment and more to do with the automotive lending business. For the second consecutive quarter, lending institutions have ...

Published:  Fri, 20 Oct 2017 10:38:00 GMT



Regulator Blasts Wells Fargo for Deceptive Auto Insurance Program

... Wells Fargo for forcing hundreds of thousands of borrowers to buy unneeded auto insurance when they took out a car loan, as well as its handling of the problems once they were detected. The regulators' report, sent to the bank this week, is preliminary.

Published:  Fri, 20 Oct 2017 21:32:00 GMT



How to finance a car at 0% interest

Paying no interest on a new car loan may sound almost impossible. But it is possible for people with very strong credit. And it's something you should definitely consider, because over the life of the loan it can save you hundreds of dollars. Rates as ...

Published:  Tue, 17 Oct 2017 13:39:00 GMT



Wells Fargo, Chase clip auto originations

Third-quarter auto loan and lease originations dropped 47 percent at Wells Fargo and 5 percent at Chase as the lenders continued to tighten their credit standards, executives said during earnings calls last week. Wells Fargo's auto originations in the ...

Published:  Wed, 18 Oct 2017 01:00:00 GMT



The Benefits of Graduating Defensive Driving Courses When Applying for Auto Insurance

LOS ANGELES, Oct. 22, 2017 /PRNewswire-iReach/ -- Auto-car-insurance4.info has released a new blog post presenting the benefits of graduating defensive driving courses when buying auto insurance. The main reason drivers pay more for car insurance is their ...

Published:  Sun, 22 Oct 2017 07:09:00 GMT



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