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      December 15, 2017

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Are Auto Loans Through A Car Dealer A Good Idea?

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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.

How the Fed Rate Increase Affects Your Mortgage, Car Loan and Credit Card Bill

The Federal Reserve's decision to raise its benchmark interest rate on Wednesday, the fifth increase since the financial crisis, will probably reach beyond Wall Street and into most American homes. Anyone with a credit card will see a small but instant ...

Published:  Wed, 13 Dec 2017 20:06:00 GMT



Breakthrough claimed in remote, electronic signature on auto finance contract

Dealership technology provider RouteOne, in a venture with Toyota Financial Services, says it has successfully processed the industry's first remotely captured, electronic customer signature on a finance contract arranged through a dealership. The contract ...

Published:  Thu, 14 Dec 2017 16:01:00 GMT



BAY online auto lending doubles

Krungsri Auto, the auto lending arm of Bank of Ayudhya (BAY), saw its digital loan growth double to 1.2 billion baht this year, indicating that the online channel is gaining ground. Millennial car buyers were the primary applicants for such lending ...

Published:  Thu, 14 Dec 2017 16:20:00 GMT



Don't fall for this car dealership scam

A recent post from Edmunds.com highlighted a scam that some car dealers have used called "yo-yo financing." What happens is that the salesman will approve your credit and let you sign the papers for the car. A few days later, they'll call you back ...

Published:  Thu, 14 Dec 2017 15:54:00 GMT



How a Fed rate hike could impact your auto loan

The short answer is "yes." However, it's not a perfect correlation. In other words, don't expect auto loan rates to increase by the exact amount the Fed raises the federal funds rate target range. There are certain consumer interest rates that are directly ...

Published:  Wed, 13 Dec 2017 10:46:00 GMT



Save time, hassle, and money with our guide to painless car buying and leasing

Federal law guarantees you one free credit report each year. Next, you need to shop around for the best loan rates. The car company might offer the best deal. Your dealership's Finance and Insurance department might be able to get you the best rate.

Published:  Wed, 13 Dec 2017 06:00:00 GMT



Smartphone app AutoGravity lets consumers get preapproved for auto loans

Valerie Cusco said her husband warned her not to fall for a scam. She really, really wanted a new car. And her birthday was coming. And she didn't want to wait. And she was excited. So she surrendered all her personal information and, well, it turned out OK.

Published:  Mon, 11 Dec 2017 20:00:00 GMT



How to throttle down on car costs and save thousands

As with insurance, shopping around can save you a lot of money. And make sure to look at options outside of the car dealer's financing. Sometimes the manufacturer might offer the lowest rate, but other times the better option might be a bank or credit union.

Published:  Tue, 12 Dec 2017 04:59:00 GMT



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