So you want to buy that new flashy Beemer, but you have fewer funds than you wanted, do you settle for another less expensive car? Nowadays, you don’t have to make sacrifices when it comes to the car of your dreams. Typically, financing a car is a standard procedure for most car buyers. It may be a confusing process but the bottom line is, you’re figuring out how to pay for your vehicle and deciding on the amount of your car loan is part of this process. When financing or leasing a car, there are several things to always keep in mind; which we’ll explore below the top 5 things you need to know about financing your vehicle.
1) The real price of the car is not accurately represented by its sticker price. Make sure you haggle the price if you aren’t purchasing your car from a “no haggle” or “no hassle” dealership. If you want to buy the vehicle immediately, chances are they will try their best to get you to buy, even if that means negotiating on the price as much as 5-10%.
2) Zero interest, or zero down, zero payments for one year may sound attractive and tempting for now, but in the long run it can actually be more of a financial detriment for you. Within the first year of these types of payment plans, the buyer may not owe a single cent. However after that first year, the buyer will be forced to start paying their car loan with above average interest rates and larger payments. This happens for a number of reasons. In your first free year, the dealer isn’t really paying for your car payment, which means that you will still have to make those payments, just at a later date, and now your payments will be larger and in a shorter time period.
3) The best financing option varies from people to people. A lot of car dealerships will advertise incredible financial plans, but really, when you calculate your debt, only a few select people with above-average credit will be eligible for this. Those who are not eligible to pay, must fork over several times more over the course of their financing term. Keep an eye out for these types of things when you’re choosing your car loan plan. Check your bank or credit union to see what financing options are offered BEFORE you head to the dealership.
4) Hidden “extra” fees are common when purchasing a car. On the final bill, such things as rust protection, fabric protection, and even tinted windows may be added expenses, which you don’t need. Be sure to cross these features off the invoice if you are certain you have no use for them. Dealers make a great deal of money by adding items that look “important” or a necessity onto the bill, so make sure all the features on the vehicle are the ones you want.
5) Extended Warranties: do NOT let the dealer talk you into getting an extended warranty. They are very overprices and 90% of the time, you don’t need them. Most new vehicles today come with great factory warranties that will cover your car up to 100,000, so think about that first before purchasing any warranties.