Before you decide what vehicle you
want, it is worth it to have your financing already in place. This
eliminates one more area for the dealer to get a little extra money
from you.
You can borrow money from several
places for a new or used vehicle:
Banks and credit unions often offer
nice vehicle financing packages. You can have these loans approved
before you even go to the showroom. You will usually find very low
rates at the bank, and even lower rates at a credit
union.
Online lenders have become more and
more popular. They offer very attractive rates and contract lengths.
The loans are handled purely on the Web, and the check is in your
hands in just a few days to be used at the dealership or with a
private-party purchase.
Home equity loans are often a good
place to find a low interest rate for a vehicle purchase. Your
interest payments will be tax deductible. You must be certain that
you will not default; doing so would cost you your home. You don't
want to risk your home for a car.
Dealer/ manufacturer financing will
usually cost you more money.
But there are exceptions. Be careful,
attractive deals may not really be. Often, zero-percent financing is
made up in a pricing the vehicle higher.
The best thing you can do is to
negotiate the price of the vehicle as if you are paying with cash or
have other financing. Then tell the dealer what you already have and
ask if he can beat it.
Keep in mind that interest rates on
new cars will always be lower than on used vehicles. New cars are
also financed for longer terms than used ones. This can make your
new car monthly payments cheaper than those of a used
car.
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