When people buy a car, whether they’re first-time buyers or purchasing a vehicle for the nth time, many make one crucial mistake – they forget to factor in the cost of financing. Yes, they’ve probably thought about how much they can – and are willing to – spend, but once somebody from the dealership talks to them about putting zero down and getting a car loan extended to three years or four to keep the costs down, what they fail to realize is that they will also probably pay 3,000 dollars extra in the long run! The trick is not to wait until you’re into the final negotiations before you think about financing; by then, it’s too late. Suppose you want to strike a deal that will make your momma proud, save a hefty deposit, and don’t stay with an auto loan for more than 36 months. And there are some tips you can employ to save money for your auto loan, so here are the best ones.
- Learn about your credit rating before visiting the dealer
If you want to secure the best loan possible, one of the first steps is to learn about your credit rating before visiting a dealer – and by learning, we mean understanding it fully. Dealers often come up with seemingly reasonable rates of interest – 1.9 percent, 2.9 percent, and sometimes even 0 percent! But there’s a catch – they only offer these types of loans to those with an excellent score or rating – around 750 or higher. So if your rating is less than 650, you may end up paying for a loan with 10 percent in interest – and this is not good.
If you have a low credit rating, don’t despair just yet. It is still possible for you to get a good deal with a low-interest rate – it may not be the best, but you can at least shop around and not settle for the first interest rate that some dealerships will offer.
- Keep it short and sweet
As a used car Utah provider like Young Automotive will honestly tell you, no matter what your credit rating is, a dealership will always try to offer you 0% down, low monthly payments, or auto loans that run for four or five (or even six) years. But don’t bite – no matter how tempting it sounds! In other words, go for the opposite. Don’t go for that low monthly payment because you will be paying more interest on the car. Even though it may be tempting to go for an auto loan that stretches five or six years, you are guaranteed to pay more for the interest rate and will get less value for the car as the years go by. And here’s another tip that guarantees you never miss a payment: enroll your car payments in your bank account and set up an automatic payment system so you will never miss a single payment.
- Settle for a down payment of at least 20 percent
Lastly, one thing you can do to save money is to put down at least 20 percent of your car’s value to decrease your principal and pay less interest. If you can do so, all the better – but if you can’t, then be careful at accepting an auto loan and shop around for the best possible rates.