Car Finance Loan: When you can't just wait to buy a car

After buying your own home, one of the most expensive purchases

you will decide on is buying a car. Along with the car,

car-related expenses, like fuel, maintenance and insurance, even

accessories, can get a big chunk from your budget.

Sure, you will be kicking a few tires but that will only be half

of the battle. Know your limitations even before looking for

that new car. If you would be paying for all car-related

expenses, don't forget to spend no more than 10% of your total

earnings.

When negotiating for the price of your car, decide first on a

price range and how much your down payment will be. Should you

choose a long arrangement under a car finance loan, your down

payment would be at the minimum. If you decide to trade the car

within the first year, you will realize that you actually owe

more than your car is worth. As a general rule, never apply for

a car finance loan that is more than 80% of the price of the

car, as indicated in the dealer's invoice. Try to pay in cash or

have equity for the car which is about 20% of the car's true

cost.

Usually, your car dealer will send you to their in-house

financing department for a car finance loan. Dealers may have

less-restrictive requirements than banks, however, they could

insist on cut-rate car financing loans for you to apply for.

Such car finance loans have 3% interest rates that could be

attractive for the unsuspecting customer. Unfortunately, these

low interest rates only apply only to certain models or short

term car finance loans of 12 months tops. You'll be surprised at

how dealers make a lot of money on car finance loans, even when

it's done through the manufacturer.

As a good rule of thumb, always negotiate the price before you

reveal that you are thinking about applying for a car finance

loan. If they know ahead of time that you plan on wrapping up

the deal with a car finance loan, they will frequently try to

create a dilemma for you by giving you a lower rate on a higher

price or a lower price at a higher finance rate. If you do

decide on a car finance loan through the dealer, you can

negotiate the interest rate. Dealerships usually have several

loan sources, including local banks and the manufacturer's

credit company. Each source sets their rates to the dealer.

It is important to investigate other sources for a car finance

loan, such as your bank or credit union, before you sign your

name. Choose from several sources for car finance loan options.

Find out from banks or credit unions if they have any special

deals on car finance loans right now. Use a Car Finance Loan

Worksheet to compare various sources.

With so many choices for a car finance loan, you need to learn

so much. Always consider your financing carefully. Open your

door to several possibilities while weighing your choices with

caution. Come up with a shopping list of what you are looking

for in a car finance loan deal. When you become well-informed,

chances are, you will be saving more money and get the right car

for your budget.

About the author:

Simon Gelfand writes for www.ArticlesBase.com, read more about

Auto Loan on the website.

Submit

your Articles and find articles.

Written by: Simon Gelfand