An estimated 17 million new cars were bought last year at an average price of $27,800. Most of these new cars had to be financed, and over half of these loans were for five years or longer.
Tip #1 - Shorter Is Better
If you have to finance a new car, shorter is better. As Peter Valdes-Dapena of CNNMoney points out,
“There are serious downsides to this approach, though. Besides paying thousands more in interest, buyers taking out long car loans are more likely to find themselves in a financial bind if they need a new car again in just a few years. That could happen because of an accident or simply because a car owner is tempted by a newer model.”
One way to avoid this potential problem is to have a larger down payment so you have a smaller amount to finance on a new car loan. Another safeguard is to take the shortest loan term for which you can handle the monthly payments.
Tip #2 - Financing First
According to the editors at Edmumds.com, if you arrange financing before you go to the dealership, you are in a much stronger position to negotiate. This important step presents a number of advantages because it keeps negotiations simple in the dealership and allows you to shop competitive interest rates ahead of time. It also removes dependency on dealership financing and encourages you to stick to your budgeted amount.
Tip #3 - Comparison Shop
Shop around to get the best possible price on your new car. Check newspaper ads, dealer showrooms, and the Internet. Plan to negotiate as most dealers are willing to give a little from their profit margin—usually between 10 and 20 percent—to make the sale. If you don’t find what you want at the neighborhood dealerships, consider ordering your new car. There are several reputable car-buying services online.
Learn more about how to Finance a New Car and get a complimentary loan quote at Auto Loans In Seconds. It is a no-risk way to discover how much you could be pre-qualified to borrow toward a new car.
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