Top 5 Things to Know About Financing Your Car

So you want to buy that new flashy Beemer, but you have fewer funds than you wanted, do you settle for another less expensive car? Nowadays, you don’t have to make sacrifices when it comes to the car of your dreams. Typically, financing a car is a standard procedure for most car buyers. It may be a confusing process but the bottom line is, you’re figuring out how to pay for your vehicle and deciding on the amount of your car loan is part of this process. When financing or leasing a car, there are several things to always keep in mind; which we’ll explore below the top 5 things you need to know about financing your vehicle.

1) The real price of the car is not accurately represented by its sticker price. Make sure you haggle the price if you aren’t purchasing your car from a “no haggle” or “no hassle” dealership. If you want to buy the vehicle immediately, chances are they will try their best to get you to buy, even if that means negotiating on the price as much as 5-10%.

2) Zero interest, or zero down, zero payments for one year may sound attractive and tempting for now, but in the long run it can actually be more of a financial detriment for you. Within the first year of these types of payment plans, the buyer may not owe a single cent. However after that first year, the buyer will be forced to start paying their car loan with above average interest rates and larger payments. This happens for a number of reasons. In your first free year, the dealer isn’t really paying for your car payment, which means that you will still have to make those payments, just at a later date, and now your payments will be larger and in a shorter time period.

3) The best financing option varies from people to people. A lot of car dealerships will advertise incredible financial plans, but really, when you calculate your debt, only a few select people with above-average credit will be eligible for this. Those who are not eligible to pay, must fork over several times more over the course of their financing term. Keep an eye out for these types of things when you’re choosing your car loan plan. Check your bank or credit union to see what financing options are offered BEFORE you head to the dealership.

4) Hidden “extra” fees are common when purchasing a car. On the final bill, such things as rust protection, fabric protection, and even tinted windows may be added expenses, which you don’t need. Be sure to cross these features off the invoice if you are certain you have no use for them. Dealers make a great deal of money by adding items that look “important” or a necessity onto the bill, so make sure all the features on the vehicle are the ones you want.

5) Extended Warranties: do NOT let the dealer talk you into getting an extended warranty. They are very overprices and 90% of the time, you don’t need them. Most new vehicles today come with great factory warranties that will cover your car up to 100,000, so think about that first before purchasing any warranties.

Considerations When Looking For Car Finance by Location

When looking into car finance options it may be confusing as there are so many offers and deals out there. You may want to take what might seem to be the easiest option of walking into a dealership to buy a vehicle and take the finance deal they offer. However, this might not necessarily be the cheapest way of obtaining the finance needed to purchase a car. You may want to compare the cost of interest rates online and there are specialist motoring websites that search for car finance by location for you and allow you to look for a new or used vehicle in your area too.

If you choose the option above to look for a vehicle and car finance by location then of course this may save a great deal of time. Usually you are able to browse through new and used cars in your area and if you find what you are looking for, you are able to compare the best deals on your finance. If you do not understand APR then this may be the ideal choice for you as you may be sure that they find you the best deals possible. When you purchase a vehicle this way, usually everything is taken care of for you and all you do is pick up the car from the dealer.

When looking for a vehicle and car finance by location you then have to decide how much you are able to repay each month. To help keep the loan affordable you may be tempted to stretch out the term of the loan. When considering this you may want to use a loan calculator to work out how much you have to pay in interest and in total. It may help if you are able to pay something towards the cost of the vehicle so if you do have savings you may be able to borrow less and so you pay less in interest. Another bonus to taking a personal loan to finance your car is that the vehicle is yours and providing you keep the repayments up to date, or pay off the loan, you are able to sell or trade in the vehicle whenever you wish.

Of course, if you are going to take the traditional method of buying your car by going into a dealership on foot, the dealer usually offers car finance. When taking finance this way it is called hire purchase. As the name might suggest the vehicle is not yours until the final payment has been made, until then you are just “hiring” the car. You also usually have to put down a deposit on the car. As the vehicle is not yours until you have paid the final installment you are unable to sell the car or trade it in until this time.

Whichever method of car finance by location you choose, reading the terms of the contract is essential so you know exactly how much the vehicle is going to cost in total with added interest.

Do You Have Problems Financing A Car?

Car finance problems can come in all shapes and forms and can cause a variety of headaches. Being aware of some of the problems may help you avoid them.

The first and most common of all car finance problems is a poor credit rating. A poor credit rating may determine whether you are able to get financing for a vehicle or not. Those with a poor credit score are considered high risk to lenders and have to pay more for their loan.

A low credit score leads to the next of the car finance problems, which is having to pay high interest rates on your loan. High interest rates along with additional loan fees are indicative of a poor credit rating. High interest rates can cost you hundreds if not thousands over the life of your car loan.

Maintaining a positive credit score can alleviate this car finance problem. There are things you can do reasonably quickly to increase your credit rating. Do what you can to learn how to repair your credit and increase your credit score.

The next reason for car finance problems is what they call a negative equity car loan. Another term you may hear is an upside down car loan. This means that the balance due on the loan is greater than the value of the vehicle. These types of auto finance problems can feel like a black hole with no way out.

In these times, upside down loans are common and typically come from the longer loan terms and quick depreciation of a vehicle. A possible way out of this type of auto finance problem is a savings account. Do all you can to set some money aside in a savings account to help cushion the difference between what you owe on the car and its current value. You can also make extra payments every month on your loan to help off set your negative equity.

Another one of the car finance problems is the insurance premiums. If you have an auto loan you will be required to have the car covered by full insurance. If you have a poor credit rating you will most likely be charged higher insurance premiums.

Insurance companies pull your credit report and charge you more for insurance if you have bad credit. This is because reports show that people with poor credit ratings report more accidents than those with higher credit scores.

Another problem comes from making late payments on your auto loan. Being late on a payment can lower your credit score by 80 to 120 points. Having late car payments on your credit history can make it more difficult to buy another car when you need one. If you are overwhelmed with car finance troubles you may begin falling behind on the payments. This could cause the bank to repossess your vehicle leaving you with no wheels and a black mark on your credit report.

Address these problems as soon as they come up in your life so they don’t get out of hand and cause you more headache and problems in the future.

Do it Yourself, No Money Down – Bad Credit Auto Financing For Cars, Trucks Or Motorcycles

The majority of the problems that occur when individuals want to finance for used car are related to the importance of the paperwork. Many of us think that paperwork ought to be completed as quickly as possible so that we are able to drive with this cars right away. You shouldn’t rush into any decisions when financing a used car because there is really a significant amount of cash that you must consider and there’s no room for mistakes.

To start with, it is crucial to get the deal decided through the car salesman to be put in writing within the contract. In other words, anything must feature the monthly payments which are based on the interest rate. Speaking of the interest rate, it’s a common practice among dealerships to inflate it so that they can create a nice extra profit. If you want to avoid this and I’m sure you need to do, you’ll need to get independent vehicle financing before heading out towards the dealership. In so doing, you are able to proceed as a “cash buyer” and the only thing that you’ll be negotiating may be the cost of the vehicle. Obviously, car salesman always have preferred their customers to possess monthly obligations because in this manner it’s easier to allow them to hide some of the costs of the car.

Finance for car or truck can be obtained from a bank, on-line lender. The most common issues car buyers need to face when trying to invest in an automobile are:

a) They don’t know their credit score – because of this, you should order a duplicate of the credit report and proper any discrepancies that you simply notice. The loan bureau will specify how you can fix these errors when they send you the report;

b) They have the tendency to overspend once they reach the dealership – and that’s why you should jot down a price range for that vehicle and stick to it all the time. According to finance experts, the vehicle payments combined with the related expenses shouldn’t consist of more than 20% of your monthly net income;

c) Many car buyers go to the dealerships without having done some research concerning the current rates of interest and as a consequence, they don’t know if the speed they’re offered is competitive or not – for this reason, you should use the web to compare rates and obtain a clearer image of what you should be looking for in the dealer;

d) Lots of car buyers navigate to the dealership without obtaining the appropriate auto financing which means that they won’t have any negotiation powers when discussing using the dealership concerning the interest rates – which is why you need to get a no-obligation loan before heading out to the dealership;

e) In certain situations, the customers are confused or pressured by the staff of the dealership and although they have second thoughts, they still sign the offer – which is why you should do your homework in advance so that you can know what to anticipate from the dealer.

As you can see, there are a lot of problems that must be taken into consideration before purchasing a used car. Considering that always we’re referring to a lot of money, you’d better do your homework to be able to grab a good deal that won’t ruin your wallet.

Do it Yourself, No Money Down – Bad Credit Auto Financing For Cars, Trucks Or Motorcycles

A rumor that has been spread since the 1960’s is that whatever a car dealer gets for a down payment is nothing more than profit. This rumor is in part, true.

An Example

The following example applies whether you’re buying a car, truck or motorcycle with bad credit.

Let’s say that you want to purchase a used car that has a selling price of $15000.00 and the dealer is telling you that because of your bad credit history, you have to put down a 10% down payment of $1500.00. In cases like this, it is very likely that the loan company approving you will only “advance” $13,500.00 on the vehicle in question and this is generally based on loan value. Typically, the dealer will have paid somewhere around loan value for the car and if they sell it at this price, then they aren’t making any profit. So in this common example, requesting that you make a cash down payment of $1500.00 is in fact, $1500.00 of dealer profit and nothing more.

Dealers do have to make money and $1500.00 is a reasonable profit. It’s disheartening however, to fork over a couple weeks worth of income just to make that happen, though.

How to Get A Car with No Money Down

If you have bad credit and need auto financing, and you don’t want to put any money down, there is a solution. Now, hear me out on this, because this information can really benefit you and this information comes from 20 years of experience working in car dealership finance departments…

Buying a car from a private owner. This reduces the amount financed by around 7% or whatever your local tax rates are. This reduces the amount needed to buy the car and less money that has to be borrowed. There are also no dealer “doc” fee or dealer “prep” fee, which also reduces the amount needed to be loaned by $99 to $599 typically charged by car dealerships. Reducing the amount needed is good!

Negotiating with a private seller on the sale price is MUCH easier than negotiating with people that do it for a living (car dealers). If the seller doesn’t have a large amount owed to the bank and is frustrated with taking time to show the car, you may be very surprised to find some really great prices on cars for sale by owner. This can be in your local newspaper, bargain paper or online classified.

“Do-It-Yourself” auto financing. This is the most important part. Bad credit doesn’t mean that you can’t get a car loan from a loan company outside of a car dealership. If you deal with a loan company directly, you’re only dealing with them on the finance side of the purchase, not the price of the car. This enables you to qualify (get approved) for a specific dollar amount that you can base your car shopping on. There are online resources to do this from the comfort and privacy of your home.

Summary

Buying a car from a private owner reduces the amount you need to borrow significantly and if you shop a little, you’ll have no need for a down payment, whatsoever. Also, this involves arranging your own financing which is very doable if you have bad credit and know where to go.

Finance a Car the Smart Way

Few people can afford to pay for a car by simply writing a cheque or paying cash, especially a brand new car. Even a few thousand dollars can be hard to come up with on the spot. This means you need to get a loan of some kind. Are you familiar with APR and 0% financing? Have you examined potential loan arrangements ahead of time? If not, then familiarize yourself with the negative and positive aspects of each institution that will gladly help you finance a car.

The reason they will be so glad is that this is how they make money, whether you are dealing with the automotive salesman, your bank, a private institution, or an online business. Going to your bank for a loan is probably the most sensible option to take. For one thing, they have a vested interest in keeping your business if you already hold accounts there. They are heavily regulated to protect customers. You probably have a business relationship with at least one individual here, thanks to your mortgage or commercial transactions. Perhaps you trust this individual and can work directly with him to secure your loan. In this case, he can discuss your potential car purchase with honesty, exposing anything that looks suspicious about the deal in his professional opinion.

It is not that car dealers are necessarily going to pull the wool over your eyes, but some deals sound better at first than they actually turn out to be. There is no lying involved, just a certain amount of sweet talking. A dealer is likely to try and have you sign a financing deal with him right there at the car lot. If he does, then you are going to feel pressured. You just want to drive off the lot with your brand new (or lightly used) vehicle, not sit around reading small print. The thing is you need to read that tiny printing and be aware of interest rates, penalties and any extra fees.

Some people will go with online financing companies, and this can be a highly convenient way to finance a car purchase if you have no credit history or your rating is poor. Take care, however, to establish the credentials of any financial institution. If the rates look too good to be true, they are probably unreliable. Whichever route you take has to be one you can live with for many months.

Car Finance Options For You – How to Search For Car Loans Online

Wanting to have a car is quite natural for all of us. We need a working car that can take us to work, to school and to any other place we think of. While the desire for a used or new car is always present, it is not always that we have the funds to finance our desires to buy a car. With the help of car finance companies that offer car loans, you can make your plans an easy reality and drive home the car that you want.

Getting the right financing for your car can be easy if your credit is history is good. You simply have to find the car finance company that you prefer, process the loan application, and wait for it to get approved. All these can be made without bumps and creases if your credit score is good. What if, however, that you have bad credit standing? Does it mean that you will never have the means to buy the car that you want? Does it mean that you cannot apply for car loans because you will only get disapproved in the end? The answers to these questions have changed dramatically over the years as there are now more lenders opening their doors to people with bad credit.

You can now apply for a car loan even if your credit standing is not perfect. You do not need to have an impeccable credit history just to apply for a car loan that is reasonable to you as a buyer. All you need to do is to find the right lender and this task has been made easier nowadays. Finding a lender who is open to bad credit car financing can be tricky without the help of a good information site. You must hook up with online sites that specialize in finding financers for car loans whatever financial situation you are in.

Such websites can help you make your search for car finance easier and more convenient. You can access such websites so that you can be led to the best possible car financier for your needs. When using a car finance directory, listing or information site, you usually just have to enter your information and also the finance terms that you prefer. That particular website will then lead you to providers of car loans so that you can create a good deal that is both fair to you and to the financier.

Making use of such search websites can make your financier search easier. You do not have to hop from one website to another nor do you have to drive from lender’s office to another just to check if they accept your application for car loans. With one site, you can be directed to a financier that can guarantee you to have the car loan you need. That way, you do not waste time, energy and efforts but you also get assured of getting the financing you need in terms that is light on your shoulders.