Things to Consider When Getting a Car Loan

Have you been thinking about getting a new car? If so, then more than likely you’re going to need a car loan. Or perhaps you’re thinking about refinancing your current car loan? Either way, you’ll benefit from considering all your options before you make any final decisions.

The first thing you need to know if what your FICO credit score is and what is coming up on your credit report. Your credit score basically represents your credit worthiness in the eyes of most car loan companies, and they view it as a means to assess your ability to repay the money they are considering lending you. Don’t forget, every year you have the right to a free copy of your credit report for review.

Next, consider whether there are any 0% loan offers from the car dealers in your area and whether that is the best option for you. The 0% offer definitely seems more attractive than a 4% loan, but in some cases, depending on your situation, you may be better off with their cash rebate offers.

Consider this, at 4% interest and a $2,000 rebate on a loan term that’s 36 months, your monthly payment will be reduced by $30 and you’ll also be saving $1,100 on the total cost of the loan over the 0% loan offers. Break out your calculator and run some various scenarios before you make your decision.

Whenever possible, try to pre-arrange financing before you go shopping for your new car. There are a number of benefits to using this approach. You’ll know beforehand exactly how much the loan will cost you and exactly what your price-range is when it comes to the cars that you’re going to be looking for. Knowing exactly how much your monthly payments will be and how much the total car will cost you is the best way to stay in control your financial situation.

Having pre-arranged financing will also give you an advantage when it comes to negotiating with the car dealers. Part of the purchase price they offer always depends on whether or not they make the loan, so often times a dealer will accept a lower purchase price if you take their financing offer. Ponder the different scenarios carefully before you decide how to proceed. If the purchase price is low enough, it may be worth it take their financing offer. You can always refinance the very next day, if you want to, but that has costs too that should be carefully considered.

Probably the best part of having pre-arranged financing is knowing that you can just walk away from any car deals that are not favorable to you. New cars are just about identical from one dealership to the next, so if you can get a better deal than it might just be better to move on to the next dealership. In deciding whether to do this, you need to always consider not just the low price that is immediately being offered but also the service being offered to you after the purchase. Weigh your options.

Finally, be sure to consider the pros and cons of leasing a car over another form of financing. For example, getting a home equity loan can give you ready cash that comes with tax deductible interest and most contracts do not require that you use the money on your house. If that’s an option for you, be sure to consider it carefully. Taking the time to do a little research and considering all of your financing options is the best way to save money when you’re buying a car.

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