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Auto Financing Tips

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Auto Financing Tips

A little pre-car-shopping homework could save you a lot of money

There are a few car financing tips for those who can not pay cash for their new or used vehicle. In these days of new motor vehicles costing twice as much as your parents paid for their first home, few people are paying cash for a car. Which mean that you are going to have to obtain some type of auto financing.

Before you go car shopping you need to know your credit rating. If there are some problems, fix them first. While a few problems won't necessarily prevent you from getting a vehicle, it will prevent you from getting the best interest rate. Believe me, and 8% rate is much better than 18%!

Before you head off to the auto dealership you need to know exactly how much you can afford in monthly payments. Set it low and expect it to go much higher, so know the absolute most you can afford to pay and don't let the salesperson talk you into spending more.

The next of our auto financing tips stresses the importance of avoiding the temptation of paying too little for a down payment. While it makes it easier in the here and now, in a few years when you start thinking about upgrading to another vehicle, you'll find that you still owe too much.

Something that may come as a surprise when mentioning insurance in connection with obtaining auto financing: It's not necessarily important to the lender that you have auto insurance to obtain the loan. No, many lenders will be interested in whether you have life and disability insurance.

Number five in our auto financing tips is the importance of shopping around for your auto loan. There are many loan sources other than the dealership. Look into your local bank, the credit unions and online auto loan companies.

Next, read the fine print. It would be too bad if you decide to pay off your loan early, only to find that you have to pay an early pay off penalty. That reminds me, I don't know whether I have an early pay off penalty.

All in all, these auto financing tips point to the fact that a little pre-shopping homework could save you not only time, but potentially a lot of money. Don't just wake up one day and decide to go buy a new car. Take your time. Educate yourself and shop around. Then when you're ready.go for it!

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