Before
you decide what vehicle you want, it is worth it to have your financing
already in place. This eliminates one more area for the dealer to get a
little extra money from you.
You can borrow money from several places for a new or
used vehicle:
Banks and credit unions often offer
nice vehicle financing packages. You can have these loans approved before
you even go to the showroom. You will usually find very low rates at the
bank, and even lower rates at a credit union.
Online lenders have become more and
more popular. They offer very attractive rates and contract lengths. The
loans are handled purely on the Web, and the check is in your hands in
just a few days to be used at the dealership or with a private-party
purchase.
Home equity loans are often a good
place to find a low interest rate for a vehicle purchase. Your interest
payments will be tax deductible. You must be certain that you will not
default; doing so would cost you your home. You don't want to risk your
home for a car.
Dealer/ manufacturer financing will
usually cost you more money. But there are exceptions. Be careful,
attractive deals may not really be. Often, zero-percent financing is made
up in a pricing the vehicle higher.
The best thing you can do is to
negotiate the price of the vehicle as if you are paying with cash or have
other financing. Then tell the dealer what you already have and ask if he
can beat it.
Keep in mind that interest rates on
new cars will always be lower than on used vehicles. New cars are also
financed for longer terms than used ones. This can make your new car
monthly payments cheaper than those of a used
car.
