3 Keys to the Right Auto Loan for You

Buying a new car is exciting. Everything from deciding on the make and model to test driving your dream can be a lot of fun. The tough part comes when it’s time to negotiate the price and finance the purchase.  I recommend these three simple tips to negotiating a good deal on your purchase and finding the best auto loan for your circumstances.

Research, research, research

 The internet is a car buyer’s best friend.  Whether you’re shopping for a new or used car, you can educate yourself on everything from gas mileage to safety information, to options and consumer reviews before you step into a dealership.  This information will help narrow down the car choices on your list.  From there, you can visit individual dealership websites for pricing.  Also, I recommend using an online car service that aggregates thousands of makes and models in one site.  We partner with TrueCar to offer our Car Buying Service service. This service allows you to see what others paid for the same car you want before you buy.  Better yet, you’ll receive guaranteed pricing from local, certified dealers.  When dealers compete for your business, you can be confident that you are getting a better deal.

Rate and term

 The monthly payment is determined by 1) the amount financed, 2) the interest rate charged and 3) the term of the loan.  More often than not, consumers end up in the finance department and are at the discretion of the finance manager for the terms of the loan.  The finance manager will often focus on the monthly payment, but that may mean they will sell a high-rate loan and simply extend the term to fit the desired payment. They may even steer you to lenders who pay them a kick back for each loan they fund.  This can be a risky proposition because profit motives are rarely in the consumers’ best interest.

Get approved before you shop

 Not all lenders are created equal.  The interest rate is determined by the credit score, but different lenders charge different rates for the same score. For example, if you have a 730 credit score, lender “A” might finance the loan for 3.8% APR and lender “B” might charge 4.2% APR.  Don’t leave that up to the finance manager, get approved for financing before you shop!  I always recommend that you start with your local credit union.  Typically, our credit union offers the lowest rates and flexible terms.  You will know your rate, term and the total amount you can borrow before you get to the dealership.  Getting approved before you shop will also save time, so you can narrow your search to only those cars that fit your needs and price range.

By using these tips, you’ll put yourself in the driver’s seat of your next car purchase.  As always, we are here as a resource.  Check out today’s rates or get an instant loan decision today.

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