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      October 27, 2020

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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.

Auto Loans Were Left out of the CARES Act, and People Are Hurting

Over 100 million Americans owe money on a vehicle, and many are facing trouble during the COVID-19 pandemic that the government's not ready to help with.

Published:  Sat, 17 Oct 2020 03:40:00 GMT



8 things to keep in mind while opting for a pre-used car loan

There are several things that one needs to keep in mind while buying a used car. Here we are taking a look at some of them.

Published:  Sat, 24 Oct 2020 21:02:00 GMT



Car Shoppers Beware: Bad Auto Loan Deals Are on the Rise

The used car industry is booming right now and dealerships are expecting a strong winter quarter as well. That's because a lot of late-model used cars are expected to hit the market. But if you're ...

Published:  Wed, 21 Oct 2020 16:38:00 GMT



Hertz creditors decry proposed $1.65 billion bankruptcy loan

Hertz junior creditors are questioning the car rental company's proposed $1.65 billion bankruptcy loan, saying the terms of the deal are overly beneficial to lenders and that a competing offer may be ...

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Money Saving Expert Martin Lewis issues warning to anyone with mortgage, credit card or car finance

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Man accused of using coronavirus loans to purchase luxury car and airplane

Prosecutors say a Virginia man fraudulently used the CARES Act Paycheck Protection Program to obtain a loan and purchase a luxury car and a small plane.

Published:  Wed, 21 Oct 2020 10:38:00 GMT



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