In this country, most of us need to have a car. And we know that cars are expensive. As a result, many people in their 40s and 50s are still dealing with car payments, which can take a big chunk out of your monthly income. If you’re still doing car payments, you’ve hopefully negotiated the best deal possible.
The following are some tips to keep in mind when looking for an auto loan.
- Don’t finance your vehicle through the dealership. Dealer financing normally costs at least a percentage point or two more than a loan from a bank or credit union.
- Try to get a pre-approved loan from a bank or credit union before you go new car shopping. This puts you in a position of knowing exactly how much money you have and what you’re able to spend. And the car dealer will know you’re serious about buying and do what he can to get your business.
- For information and comparisons on many different credit cards, check out CardRatings.com. You can compare interest rates, application procedures, and rewards.
- Pay as much up front for the car as possible.
- Use rebates to increase your down payment, not to get a more expensive car.
- Take the shortest loan term you can manage. Never pay back a car loan over five years if you can do it in two or three.
- Consider getting a home equity loan to pay for your car. Car loan interest isn’t tax deductible, but the interest on a home equity loan is.
- Pay off the loan early, if possible. Some lenders will penalize you for paying back early, so be sure to look for a deal that doesn’t. If you need a new car, you might consider leasing, rather than buying. A third of all new car customers are leasing today, compared to only 15 percent five years ago.
Don’t put yourself in debt for a vehicle that you don’t need. A $45,000 sport utility vehicle might look great in your driveway and make you feel good when you drive it, but a car that costs half that much will still get you where you’re going and cause a lot less damage to your pocketbook.
This article was written by Tushar Mathur who writes regularly on the Everything Finance Blog. You can read some good Personal Finance How To Guides at Everything Finance.
