While studies have shown a tremendous increase in the use of public transportation and rideshare options like Uber (with over 160,000 drivers), statistics continue to prove that the necessity of owning a car has far from decreased. Over 91% of US households own at least one car, with the majority of owners stating that they need a vehicle for their daily commute. When it comes to finding the right car for you, how to finance your new car is a crucial part of the process.
Finding the best car loans on the market can be a daunting task that leaves many settling for something less than favorable. However, with a little research and online tools you can put yourself in control when it comes to financing options for your new vehicle. Follow these tips to avoid the pitfalls of high interest rates and unnecessary fees, and to keep your monthly payments reasonable.
Finding Solid Ground
The most important step to take before looking into any loan is checking your credit score. Sites like Credit Karma allow you to do this for free, and can give you a good idea of what types of rates you can expect based on your score. Combine this information with a loan calculator and you can walk into a lender’s office with the confidence you need to get the loan you deserve.
Skip the Dealership
While choosing to finance your vehicle through the dealership is the most convenient option, buyers often miss out on the best rates this way. The average dealership will have a markup of 2.5%, which may not seem like a lot until you realize how much extra interest you will end up paying when it is all said and done. Furthermore, there will be additional fees tacked on so that the dealer can make money off of the sale.
Opting for a separate lender will open up a wide variety of lower rates and better monthly payments. Whether you choose your bank, a credit union, or auto lender, once you are pre-approved it becomes easy to walk into the dealership and know exactly how much car you can buy. Always make sure to look into a lender’s track record via state or federal sites, or the Better Business Bureau.
Utilize the Internet
In today’s world, we have a wealth of information right at our fingertips. Take advantage of online sites that offer side by side comparisons of lenders, their pros and cons, customer ratings and experiences, and the average rates you can expect from each one. Look for ones that offer valuable resources, excellent customer service, instant or same day approval, and those that offer loans for both new and used cars as well as refinancing options.
You can find fantastic consumer satisfaction studies online, that can give you insight into which companies truly care about their customers.
Negotiate
The auto loan market is fiercely competitive, making their rivalries work to your advantage. Don’t be afraid to ask about discounts and incentives, as many are not advertised, and push for the best loan terms possible. By using your credit score and a loan calculator, you will know if a lender is trying to offer you something less than you deserve.
Making comparisons, taking a few notes, and doing a little research can feel tedious at times, but it is essential to securing the best car loans available. In the end, it will all have been worth it and you will have the satisfaction of knowing that you were in control over your financing. Don’t fall victim to the pitfalls of a terrible loan, put yourself in the driver’s seat and take charge!