Comparing Car Loan Rates So You Get the Best Deal
By Daily Dosh | November 16, 2007
Looking to buy a car or just refinance? Then it will serve you well to do a bit of research before signing on the dotted line.
Find out about your credit report items and FICO. The overall score you have doesn’t necessarily give the full picture about your credit worthiness and ability to pay a loan. However every lender uses it and will have great bearing on whether your loan application is approved or not and what interest rate you will pay.
When shopping for a car loan, make sure to ask for the current copies of your credit report from the three major agencies and review them thoroughly.
[Equifax: PO Box 740241, Atlanta, GA 30374; www.equifax.com
Experian: PO Box 2002, Allen TX 75013, www.experian.com
TransUnion: PO Box 2000, Chester, PA 19022; www.transunion.com]
You will also want to make sure that the 0% loan you have been offered by the dealer is the best way to go. You may find it an attractive number but it may be that you’d be better off taking a cash rebate instead.
Here’s an example: at 4% with a $2,000 rebate on a 36-month loan, the monthly payments will be $30 lower and you’ll save over $1,100 on the total cost over a 0% loan. You can use one of the online loan calculators to calculate these figure yourself to see what the best deal is for you.
Of course, before you even start looking at cars to buy you need to pre-arrange finance. This will mean that you can better decide what you can afford in terms of amount per month and the total spend.
It’ll also give you more bargaining power with the dealer because the price they sell the car to you is often dependent on if you take out a loan with them. Dealers will often accept a lower purchase price if you take their financing offer. Run various scenarios in advance to decide where your trade-off amount starts.
It could be prudent to accept their finance offer if the cost of the car is low enough. You can be a bit cheeky by refinancing the day after, although there are costs involved with this.
Another reason for arranging finance in advance is that you can simply walk away from any deal you don’t think is good enough. This is especially true with new cars because they are basically the same from one dealership to the next.
If you receive a better deal elsewhere, it might be worthwhile to go on to the next. Remember to think about not only the price but also the after-sale service.