Every time you go to a car dealer to buy a car, whether it be
new or used, it is highly likely that the dealer will also have
on offer, various financing deals that will assist you in paying
for the car. While these may seem extremely attractive,
especially if you don't think you could afford the car outright,
you should always check twice to make sure you are not getting
ripped off or taken advantage of.
The most important thing to know in these situations where the
car dealer is offering you vehicle financing, is that you do not
have to take your car loan from the dealer. There are a host of
alternative car loan sources that will be willing to lend you
the money you need to buy the car, such as banks and other
lenders, and if they are reluctant to lend you the money you
need, perhaps this is an indication that you cannot afford the
car and should look at buying something cheaper or waiting till
you have a bit more money saved up to make the purchase.
Car dealers will often have offers for car loans that seem a lot
more attractive on paper than they actually are in fact. For
example, you should always ask, before considering an offer for
credit, how much the car would cost if you were to buy it with
cash. This may show you a hidden additional charge of the
credit, because for example, if the car would cost ten thousand
dollars with credit but only eight thousand with cash, this
straight away reveals as two thousand dollar financing charge
that you may not have noticed or calculated in to the cost of
the credit. If this were the case, you could borrow the eight
thousand from your bank and pay for the car in cash, taking
advantage of this better price.
Always, ask the dealer what the annual percentage rate or APR of
the loan is. This is the standard way of costing credit and you
can then use this figure to compare the cost with other offers.
Find out how many monthly payments you will have to make and how
much each monthly payment will be. Will there be a down payment
required at the start of the loan, or will you have to make a
closing payment at the end of the term. Since car loans can be
such large expenses, it is always worth asking these questions
and making sure that you get the best deal available on your car
loan.
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