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Car Loan Tips

How to Avoid a Higher Interest Rate in Your Next Car Loan

Buying a car can be a daunting and intimidating task with tricks and traps at every turn. Car buyers often spend countless hours researching the best vehicles, comparing key features, and ultimately finding the best deals. But when it comes to financing their new vehicle, car buyers are often left in the dark as to what constitutes a good car loan and what abusive practices to avoid.

Run Your Credit Report

Before embarking in your car buying journey, request your credit report from the three credit bureaus. You can request your credit report for free once a year by visiting annualcreditreport.com or by calling 1-877-322-8228. Your credit report will give you a glimpse of your creditworthiness and inform you of any possible shortcomings. Knowing of all this before stepping into a dealership will guard you from the most aggressive selling tactics and help you walk away when the financing offered is not in your best interest.

Visit Your Nearest Bank or Credit Union To Get A Quote

Negotiate for a Better Rate

Other Things to Consider:

Comparison Shop Online: The internet has made it a lot easier for consumers to compare car prices and loan rates online. Start your research there before you head out to the dealership.

Yo-Yo scams: Yo-yo scams or spot deliveries occur when a car buyer drives away with the vehicle without finalizing sale. Once home, the dealer will call back the buyer claiming that it was unable to fund the loan at the agreed-upon terms. The buyer must then return the car to the dealer and often renegotiate the loan at a higher interest rate than one agreed-upon before.

Buy Here and Pay Here Dealers: Buy Here Pay Here dealerships typically finance used auto loans in-house to borrowers with no or poor credit. The average APR is usually much higher than a bank or credit union loan. The car loans made by these dealers are often unsustainable and lead to a high rate of repossessions.

Take Your Time: The average consumer spends 45 minutes with the finance and insurance department at the dealer (only 27 minutes if they take a test drive), so take your time to consider your lending options and don t feel pressured to sign the dotted line. You have the right to take the entire paperwork home before agreeing to the loan.

Don t Get Caught In The Monthly Payment Trap: Dealers will often attempt to mask the true cost of their loans by focusing on the monthly payments. Be sure to compare the total cost of all the loans offered and to choose the one that is less costly to you in the long run.





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