5 Tips to Save Big on your Next Car Loan
If you think about it, the most grueling part of the car-buying process, after agreeing on a price, is acquiring the right kind of loan for your new or used car. Most consumers enter the car dealership completely unprepared for the loan application process, and that lack of knowledge and planning is costing them millions of dollars every year.
If you want to create a win-win situation for you and the car dealership you purchase your car from, there are five steps to take before you sit down at the negotiation table: get your credit report, surf before buying, go local, speak the language and be prepared to negotiate.
1.) Get Your Credit Report
You can’t pick up a personal finance article, magazine or book that does not refer to the importance of knowing what is on your credit report. Despite the fact that modern media has been beating us over the head with this advice for the past couple of decades, most people do not know their credit score or check their credit report on a regular basis. You can get a copy of your report by directly contacting the three credit bureaus.
Not knowing your credit score and the details of your credit report before applying for a car loan is a monumental mistake. You want to have any blemishes on your report resolved before you apply for a car loan, because the results of your lender’s credit inquiry directly impact your interest rate.
Your credit report includes: basic information about you – name, address, social security number, etc.; your late payments, any outstanding debts you have, the amount of credit available to you; any public records on you such as judgments and bankruptcies; and inquiries into your credit from potential employers or lenders.
And just because you have caught up late payments, cleared outstanding debts or cleared up any judgments does not mean these blemishes are automatically removed from your credit report. Sometimes, you need to follow up with the creditors to make sure they report your reconciliation of debt to all three credit bureaus.
In addition, identity theft and/or fraud can result in false, unfavorable records on your credit report. In January 2006, the Federal Trade Commission reported that more than 686,000 people reported identity theft and fraud complaints in 2005. Stolen identity and fraud can result in major credit report issues.
2.) Surf Before Buying
You’ll be far less tempted to impulse buy, driving away from the car dealership with a car you can’t afford if you have established boundaries in your mind before you begin.
You can save big money on your car loan if you have a budget and type of car in mind before you go shopping. One easy way to accomplish this is to go online and check out different car dealership websites.
You can compare and contrast vehicle makes, models, styles, features and pricing.
3.) Go Local
There are many national auto websites, but did you know that many local car dealerships are now online as well? The advantage of working with a local car dealership can outweigh working with the manufacturer or a national website when you want the best in quality customer service, a relationship for the lifetime of your car and the best deal on your auto loan.
The advantages of getting a loan through a local dealership is similar to the reason every town in America has a locally-owned restaurant that has regulars: local businesses have a sincere investment in the community. That interest often leads to better customer service, a more customized approach to selling, and the ability to get you a better loan than you will receive from a lender who doesn’t know – or care – who you are.
Lastly, the local dealership may have more than one location, increasing your options for finding the car you need but offering the same uniform auto financing options. So, if a customer goes to one dealership and does not find what they need, they can visit another location and expect the same quality customer service.
4.) Speak the Language
There’s nothing more frustrating than going through the entire car-buying process, thinking you have a good deal, and learning down the road that you were taken advantage of – simply because you had no idea what your sales rep was talking about.
From dealer holdback to Rule of 78s, make sure you have an understanding of some of the basic industry terms that could be thrown at you during your transaction. With this knowledge, you won’t misunderstand the details or find yourself being signing a contract or paperwork that you don’t understand.
5.) Be Prepared to Negotiate
If you’ve followed the four previous steps in this article, you will be armed with the necessary tools to negotiate the best rate possible for your car loan. There’s nothing wrong with shopping around and checking with other lenders to see what kind of rate they can offer you, but you must remember that numerous inquiries into your credit report may go against you.
And, when you go through the dealer for your auto loan, the sales rep wants a long-term relationship with you. This motivates them to work harder to get the best rate possible for you. In contrast, an online or off-site lender’s interests begin and end with the loan – but the car dealer wants you to: come back and have your car serviced, return when you want to purchase your next car, and tell your friends about them, further strengthening the dealership’s reputation in the community and increasing business.
Before you sit down to get your next auto loan, take the time to do a little homework so that you can feel confident about securing the best deal for your auto loan. Investing a little time and effort before making the deal can go a long way in creating a win-win situation for you and the car dealership.
Mohammed A. Baig
http://www.articlesbase.com/loans-articles/5-tips-to-save-big-on-your-next-car-loan-123299.html
What is the best way to prepare for your first apartment?
My boyfriend and I are looking to get an apartment at the beginning of next year. We both are saving up, but are considering taking out a small loan to help us along. Are there any tips…. financially?
Well we weren’t exactly getting the loan for the rent just furniture items and such.
Why are you asking me? I’m single and live with my parents. No girlfriend here.
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You shouldn’t need a loan to get an apartment – if the rent doesn’t fit within your monthly budget (about 25-30% of your pretax income), then it is out of your range. You will need to save up enough for first and last month’s rent and the security deposit, and six months should be plenty of time to do that.
Here’s how to calculate what you can afford (assuming you will both be contributing to the rent and both have steady incomes):
-Calculate 25% of your pre-tax income, and 25% of your boyfriend’s pre-tax income (so whoever makes more, contributes more). Add these amounts together. This is the monthly rent you can afford.
-Cut that amount in half; that is about the size of the security deposit you will need. Add the amount of the security deposit and two month’s rent together. That is how much you need to save.
-Divide that amount by six. That is the amount you (as a pair) need to save each month.
good luck!
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If you are considering taking out a loan to get an apartment, then you’re probably not ready to rent. It’s essentially starting off with a debt that you’ll have to pay back and then some. Save up your money, establish an account to be used for rent and utilities only, always pay your rent and gas/electric first and you should be fine. Also, READ YOUR LEASE!! Always refer to your lease when there is a problem. Good luck!
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My line of work
I would honestly try to avoid the loan route. It adds to the financial burden and gives you an extra monthly payment.
I would say just to start, even though it sounds less appealing, but I would go with second hand furniture like couches, tables and stuff. Start slow and small to give yourself a chance to add to the place and not be too stressed with bills and other financial obligations. All of the cool stuff can always be added. You will be in the apartment for a bit. Write some goals out for things with the cost of those things. Make a budget for you together and try to stick to it, working towards those goals. The worst thing ever, especially starting out is too make it harder on yourself for financial reasons!
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The Brain 🙂
Don’t take out a loan to pay rent unless you absolutely have to. It’s much, much better to wait until you can afford the apartment without a loan. Starting life on your own in debt is not a good start. I’m sure you’ve heard about how many relationships are wrecked because of money problems.
Many apartments will work with you to spread your security deposit out over two or three months. Besides the rent and security deposit for the apartment, you may also need a deposit for many of your utilities – phone, electricity, gas. You will also have to buy some things for your new place that you might take for granted while living at home. A toaster, towels, dishes, etc. You can get a lot of good bargains at thrift stores like Salvation Army and Goodwill.
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Since every apartment handles things differently regarding first and last month’s rent, deposit, cleaning deposits, etc, I tend to take a different approach.
My advice is to figure your combined total income. With that, what is the highest you can afford along with utilities and other payments. Take something towards the middle between the easiest you can afford and the one you can least afford.
Here’s an example of how I calculated for my apartment:
Monthly income after taxes: $1425 (before is around $1760)
Total monthly bills not including rent: $550
Remaining: $875
Highest I can afford: $700 (need some wiggle room and emergency savings)
My rent is $629. Total counting rent is around $1200 with a little over $200 remaining per month. All on paper of course so this may or may not be the monthly end result.
I consulted the complex I was most interested in renting (which I am now at) and asked a rough estimate of total move in costs (came to approximately $725). Get this estimate and go from there.
At the least, you’re looking at $800 total move-in cost. This doesn’t count utility hook-ups or furniture though. At the highest, you’re looking at around $4k. Another major factor is where you’re living and costs of living.
I’d advise against a loan and simply put in a couple hundred dollars into savings each month. You don’t have to do everything right away when you move into the apartment. Start slowly and work your way up. From there, just manage your finances properly and you should be okay.
Good luck to you!
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First of all – I would NOT recommend taking out a loan for moving expenses! Once in a credit situation, it can be HARD to get out!
As you mention the beginning of 2008, you have plenty of time to save for the necessary deposits and fees. When my husband and I were married 25 years ago (today! 🙂 ), we’d bought items – some furniture, some house-hold items like dishes, silverware, pots ‘n pans, throw-pillows, lamps, nick-nacks – at garage/yard sales and thrift shops, and stored the items either at a friends’ house or in our dorm rooms. Parents can be a good source for cast-offs and storage if they live nearby. A bed and bath towels & wash-clothes are things you may consider buying new, as a decent ones can be found "on sale," so watch the sales flyers. For kitchen linens, the dollar stores are a good place to go. If you want to build credit, buy furniture (the bed?) on store credit, that has minimal interest rates and you pay of within a few months – 6 – 8 at the most. Good luck!
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