From my personal experience, this can be the most frustrated type of Loan. Because most of the times that we get into a vehicle loan, we’re under a great deal of stress! Just remember “that persuasive salesperson,” his manager, etc…it just doesn’t get any more stressful than that.
The important thing is to do your research before “you walk into that dealership” to purchase “the car of your dreams.” These days, deals can made through the Internet. This takes a great deal of stress from the experience. In the old days, you had to go to the Dealership in person, not anymore. When you request a quote from a Dealership, you can ask for the “out the door price.” When you receive that, you have a “one up” on our ancestors, who had no choice but to show up in person and be the “victim” of some salesperson trying to meet his quota for the month/day.
Once you get this valuable piece of information you can start doing your research. This is to say, do I want to get this Vehicle finance through the Dealership, or do I want to get a loan from my Personal Bank, Credit Union, Car Company, etc?
For example: Let’s say that the (after you get a discount, let’s hope) car that you have your eye on was $40,100.00. You negotiate this car down to $38,000.00. At that point you ask the salesperson (usually the Internet sales manager), what is the “out the door” price? Well, it’s going to be approximately 10% on top of that. So “ballpark figure,” your price out the door is $42,000.00.
At that point you “start shopping around” for your loan. It’s good if you don’t have “a trade in” but if you do: Try and sell it to a private party or a Dealership like for example: “Car-max.” This way you won’t have to worry about the sales person saying: “I could of given you a great deal if you didn’t have a trade in.” Who needs that anyways.
Then you can get the Bank to write you a draft to take to the Dealership. You might be surprise how easy this can be. Last but not least is: How many months do you want to finance the Vehicle for? These days, 72 months aren’t uncommon. You’ll pay a bit more interest, but it might be worth it. Another thing is your down payment. It’s good to have around 20% down. This will most likely guarantee that you get a descent rate. Getting a good interest rate depends on your FICO score, but even you don’t have great credit, if you put a good down payment, you’ll most likely get an interest rate that you can live with.
Car companies offer good interest rates too. So don’t write them off completely. If your confident about your credit, you should have no problem qualifying. Sometimes this can be good. Toyota for example: Loves it if people use them as their finance company. You’ll most likely get a great interest rate on your second Toyota if you used them to finance your first. So shop around for good interest rates, but even if you don’t, The Dealer can help you at the time of your purchase if you’re not the type of individual that gets intimidated by talking to a salesperson….