How to Find New Car Financing
|
|
New car financing is available from several sources, but consumers need to do their homework to find the best deal. Here are some tips on financing when buying a new car.
Know Your Credit Rating
Before consumers start shopping for auto loans, they should know what their credit rating is. Obtain copies of credit reports from the 3 nationwide credit reporting agencies: Equifax, Experian and TransUnion. Check it thoroughly and clear up any discrepancies. Consumers with excellent credit scores (720 and up) get the best new car financing.
What’s Your Budget?
Be realistic in how much there is available to spend. Factor in the costs for the car loan plus insurance, maintenance and operating costs. Allow about $1,000 to $2,000 leeway, but don’t go over the budgeted amount.
Check New Car Pricing
Use independent websites to check new car pricing for any models that are of interest. Look for models well-equipped or basic, depending on preference. Pricing is necessary to calculate new car financing. These websites have calculators that allow input of purchase price, expected monthly payment, down payment, interest rate and other parameters. Try inputting different down payment amounts to see fluctuations in amount to be financed.
Don’t Forget Rebates
Besides negotiating purchase price, be sure to factor in any available new car rebates or special financing. Recent rebates have averaged $3000 to $4,000. Low-rate financing can be 0.0%, 1.9%, or 2.9%, although only those with excellent credit may get those rates. Utilizing rebates can lower the amount financed considerably, while lower interest rate financing can also save cash. In order to obtain the lowest financing rate, automakers may require the consumer to use the auto company’s captive finance arm.
Get Used Car Evaluations
If there’s a vehicle to trade in, be sure to calculate the value of the used vehicle. This can help lower the purchase price of a new car, and result in a lower new car finance amount. Check Kelley Blue Book, Edmunds and NADA for used car evaluations.
Shop Around for New Car Financing
Use every possible resource, including banks and credit unions, finance companies and manufacturer’s own finance companies (like Ford Credit and GMAC). Consumers who have existing relationships with banks or credit unions may be able to shave percentage points off new car financing—and save a great deal. Start with Internet searches to compare rates. Then winnow down the choices and go more in-depth to determine the best financing deals. Previous customers who have paid on-time every month may be able to obtain financing at better rates. Lenders will also look more favorably on loan requests from prior customers—since they’re a good risk.
Getting new car financing involves research and planning. Consumers should also allow sufficient time to find the best deal.
