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Most people take a lot of time to decide what the right car for them is, but where a lot of people take much less time is in finding a good rate to finance the car at. Just because you found the perfect car does not mean you should jump on the first financing deal that is offered to you. It is always recommended that you shop around for different rates. You could finance the car directly through the dealership, but this can also be one of the worst financial decisions you make. The dealership knows that you are buying a car, they just spent time showing you the car, seeing your interest in the car, and seeing your excitement level in the car. They now know that you really want the car and they can take a chance and offer you an interest rate that is higher than it should. This way, if you decide to push back on them they can do you a ‘favor’ and lower the rate a point or two. But you would be wiser to look at interest rates online before you ever step foot into the dealership.
On a five year car finance a few points in the interest rate can add up to be thousands of dollars over the life of the car loan. So in the end, that car that you thought you got for $25,000 really could cost you well over $30,000 because of the financing. You can avoid paying a high premium in the way of interest rate by finding a rate as close to 0% apr as possible and the best place to start your search is on the internet. Even if you want to get the financing from the dealership you should print out the financing offers you found online and bring them into the dealership. Tell them that you found these rates online and you want them to match the interest rates if they want to have your business. You will be surprised at how often they will lower their rates to match the rates you found elsewhere. They simply do not want to lose your business.
What is used to determine my interest rate on a new car?
How much can the down payment influence the interest rate on a new car?
How will your interest rate affect your car loan?