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How to Save Money on Car Loans?

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Nowadays, mostly everyone needs to own a private vehicle. Despite this demand, the costs of automobiles do not go down. Fortunately, there’s always the option to borrow money for a car loan. Although you will definitely pay more with a loan than buying in cash, here are some tips to cut a great deal on loan costs. 

Improve your credit rating

The number one rule to ensure you will land the best deal is to have a good credit score. Sure it would be hard to work on it overnight though, so if you have plans of applying for car loans, it pays to check your credit report before long. This way you will know where you stand. For quick fixes, you can try searching for errors and having them removed on your credit report. You can also pay off other balances that you have. Make all of your payments on time and consider postponing your loan application until you get the desired credit score.

Prepare a sizable amount of down payment

If you provide a substantial down payment, this will leave you with only a small amount left to borrow. This means lower interest rates, lower monthly payments, and possibly shorter duration to pay off the loan in full, so you won’t be stuck in debt for long.

Shop around

Once you decide on a car loan, finding an institution to aid you with the loan is not good enough. Before finalizing and signing anything, you need to find a good deal. You can start your search with the banks, but it shouldn’t end there. Particularly if you have good credit, you can find many other sources which will offer you more competitive rates as you move along, and you will be surprised at how far can they go so that you will transact business with them.

Avoid dealership loans

Most of the time, dealerships will try to take control of the situation and decide on your credit worthiness. To avoid this, it is important to really check your credit report and let them know that you did, so that you will be in a stronger position to negotiate. Also let them know what previous offers you have received from banks and other companies so they will try to compete. Although dealerships may not always be the best choice 100% of the time, they might actually have something in store for you to do business with them.

Do not include financing add-ons

You should always beware of add-ons, especially when they’re included in the financing. Most of the time, they only increase your monthly payments but do little on your investments. If you’re looking for warranties and insurances that are actually necessary, it is often better to take them outside of the loan.

Read the terms carefully

A lot of sales traps could surprise you by not reading the fine print carefully. Once you’ve found a few good lenders, compare their terms and conditions before deciding on which one to choose. Consider the purchase price of the vehicle, the interest rates, monthly payments, the duration of the loan, and how much you will pay in total. Make sure that the terms do not change.

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