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Monday, December 5th
Shopping for another vehicle can be a very stressful experience. Finding a vehicle you can afford and that meets your needs is a tough combination in this economy. Nothing complicates the process more than finding a loan with an interest rate that you can afford.
While individuals shopping for a new vehicle will spend days or weeks looking for the best deal for their money, they often do not put the same kind of research and time into the loan they will use to finance their purchase.
Auto dealers are not interested in getting you the best interest rate or the best deal for you. They are interested only in selling a vehicle and will put their interests ahead of your own. That's why it's best to have resources and knowledge prior to shopping for a vehicle.
So what do you look for when shopping for an auto loan?
For most shoppers, the ultimate goal when looking for a good deal on an auto loan is to find a monthly payment that is affordable to them. However, focusing solely on a monthly payment that is within your price range is a mistake if you fail to factor in the other loan terms, including the interest rate. With a high interest rate, in conjunction with payments that are spread out over five years or more, it can actually end up costing twice as much to finance a vehicle as the vehicle actually is worth. While higher monthly payments up front may seem like a bad deal, they actually save you money in the long run by lowering the amount you repay in interest.
So the first piece of advice when shopping for auto loans is to look at all factors, not just a monthly payment.
Now that you understand which financial factors to look for when shopping for an auto loan, we can discuss the best options for finding a good deal.
The best place to start looking for an auto loan is through online auto loan stores. These sites have access to a variety of bank car loan rates and can automatically deliver the best loan deal to you. Organizations like TopConsumerReviews.com have reviewed and ranked the best online auto loan stores available today. You can save time and money by checking out these reviews prior to making your auto loan decision.
Another place to look for an auto loan is your own financial institution. If you are a longtime customer in good financial standing with your financial institution, they may negotiate with you for a loan at a decent interest rate. Local banks and credit unions are known for their ability to provide good loan rates for long-time customers.
Most bank websites provide information on their current loan rates. Individuals can take that information, and then compare it with what is listed on other websites to determine what interest rates they can find no their own. There are online tools available where you can enter your zip code to find out the current interest rates for your area. You can find out what your monthly payment would be, as well as accrued interest payments, over the term of the loan.
The last place to consider securing a loan is through the auto dealer; however, this is usually the most expensive option. While auto dealers may have a variety of financial institutions to tap in order to get a variety of interest rates and offers, they also tend to add a fee on to the total in order to compensate themselves for securing the loan. So as a general rule, auto dealers should be the last place you look for a loan.
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