A car brings you to places and offers you the convenience and luxury in life. Majority of customers purchase cars by getting an auto loan. This makes buying a car easier and more affordable. Car loans in the USA have been increasing, which shows that consumers have confidence in the recovery of the country’s economy.
Is getting an auto loan a right decision?
The spending statistics of 2013 reveals that the consumers’ auto loan balance has significantly soared. The Federal Reserve Bank of New York stated that the increase has been climbing without fail for the last 10 quarters. This has pushed the car loans higher in the debt list, which is as follows:
- Mortgage Loans: $8.43 trillion
- Student Loans: $1.03 trillion
- Auto Loans: $0.84 trillion
- Credit Card Debts: $0.67 trillion
If you think that getting an auto loan is an unwise decision, the New York Federal Reserve tells us otherwise. This is proven by the decline in car loan payments beginning in the third quarter of 2012. If you are looking into getting a loan for a new car, here are some tips you can use.
Determine your budget.
Start by asking yourself what you need the car for. Do you just need a practical one to drive yourself to work of a big van that can fit your whole family comfortably? These will give you an idea what type of car to buy. Proceed with evaluating your finances to figure out if you can afford one right now. If you are getting an auto loan, see if you can meet the monthly payments on top of your usual expenses. Be honest with your assessment.
Figure out the best time to buy a car.
The end of the month or the year is usually the best time to buy a car. This is because during this time, dealers push to get more sales to meet their quotas. Likewise, new car models are released in September and October and dealers offer special deals to dispose the older models. You will be surprised at the huge savings you can make if you purchase your car at the right time.
Choose a car dealership.
Do your research well. Know more about the car dealers in your area before you schedule your visits. Know who has the highest customer satisfaction ratings, best after sale service, and greatest deals.
Find out the invoice price.
Check out the car dealers’ websites for the invoice price of their cars. The invoice price is the manufacturer’s price and the selling price is what you can negotiate.
Delay the purchase if you can.
If you can save up for a few months to pay for a portion of the car price, it would be to your advantage. When you are getting a car loan, the lesser the amount, the lower the interest.
Check if you can qualify for a car loan.
You may want to check on your credit score. Although, you can still be approved for a car loan even with a bad credit, it will be for a steeper rate. If this is the case, try to approach other loan establishments, like credit unions, etc.
Visit the car dealer with a person you trust.
If that person knows about cars, then it is more advantageous. Your companion will be able to give you a sound advice and help you with the negotiations.
Inspect the car thoroughly.
This is especially true with used cars. Make sure that you are getting your every penny’s worth. Get a real feel of the car you are purchasing by taking time on your test drive.
Know how you can negotiate the price.
When negotiating prices, be armed with three things. The first is, knowing your credit score. If you are credit worthy, you have a good chance of negotiating at least a reasonable interest rate if you’re getting an auto loan. The second is, trading in your old car wisely. Some dealerships offer you a good rate on the new one, but give you a lowball price for your old car. The third is, keeping your budget in mind. Never be tempted to get a car you can’t afford.
Don’t make rash decisions.
It’s alright to walk away if things don’t seem to go as planned. Don’t make the mistake of displaying an urgent desire to buy a vehicle. If dealers notice this, it will be harder for you to negotiate. If you feel that you are not getting your money’s worth, don’t hesitate to drop the deal and walk away. This is why it is very important to do a good research before visiting the dealerships. It allows you to know for certain when to walk away and when to go ahead with the purchase.