Car dealerships are not the best choice when it comes to taking out auto loans. This is because they fix a certain interest rate on your car financing after figuring out your actual credit score. Whatever your credit score; good or bad, they will use it in order to determine the period of loan repayment and off course your interest rate. However, there are some things you can keep in mind to get the best offer from car dealerships.
Alternatives for Financing
One thing you should always keep in mind is that no matter what offers the car dealership makes to you; if you have decided not to get the finance from the dealership then you should not. There are a wide variety of options available. Banks can also be a good alternative and there are many other non-conventional lenders that you have not come across.
Things to Consider
One important thing that you should remember is that the car dealership will make various offers to you. They will try their best to persuade to you to get car financing from them, but there are a few things you need to consider before approving or declining the offer.
First thing you need to do is compare the amount of money you are paying them when they finance you loan and the price of the car if you paid in cash. The difference between the two amounts, will give you a rough idea whether the loan will be convenient or not.
Once you have this information, you will need to talk to your lender and ask them for a loan they will be able to get for you, if you were to pay in cash or upfront. However, if they are unable to find a loan you want and there is a significant difference then you should look for alternatives.
There are many other things that you need to keep in mind when deciding to finance your car with the help of car dealerships. The first thing is the annual percentage rate, which is also knows ad APR. It helps you determine the interest rate you will have to pay each year and it is calculated by following a few certain steps or processes. In order to calculate the APR you would have to multiply the yearly interest rate by the amount you have taken out as a loan.
Secondly, you would have to pay the granting fee also known as administrative fee. These are the lenders fees, which are not included in above mentioned APR. In addition you will also need to find the total time for your loan repayment so that you can figure out the amount of your monthly installments. Once you know how long you have to repay your loans and the amount you need to pay, you can easily plan when and how to pay. Planning will also help you decide whether you are in need of a down payment or not. Lastly, you need to make sure that you have read the terms and conditions of contract before signing.
Once you have found a car dealership that offers you the car financing loan that you are looking for, you can start planning and relax that you have sorted out your auto loans.