If this is the first time you are buying a car you are probably overwhelmed with options. There are so many cars on the market, there are new options, used, different financing options and many things to consider.
The whole experience, the car buying experience can be overwhelming. Everyone can agree on the fact that buying a new car is an exciting and overwhelming adventure.
Chances are that you probably are not considering buying a car with cash. Even if that's feasible it's a rare occurrence. If you do congratulations, if you are looking for financing then you will have to be prepared to make a few decisions.
With so many ways to finance a new car, it is important to explore all of your options before starting the process. The first place to start checking for financing are your local banks. Even though the economy is in bad condition these days you never know what they might have to offer. Another place to look for financing is where you will be buying your car from.
Car dealers and manufacturers also offer financing. You should know which banks offer the best rates. Credit unions usually offer the best interest rates but are very picky about their members. You may be able to become a member of your local credit union through your job or a family member.
Getting the best interest rate possible is important. Even one percentage point can mean a lot of savings during the life of your loan
Banks, credit unions, dealers, and manufacturers all use the same process to make their financing decisions. The first thing they are going to look at is your credit report. Your credit report is a compilation of your credit history including credit cards, loans, and bills.
These credit reports often contain mistakes so it is important that you get a copy of yours before the financing company you chose to finance a new car with sees it. Your credit report offers a very valuable tool for the financing company, your credit rating. Your credit rating will determine your loans interest rate.
Many finance institutions will offer a longer payment term when you finance a new car. This could cut your monthly payments and may look very appealing. These longer terms may seem like a good thing, but they increase the amount of interest you will pay and will add significantly to the price you ultimately pay for the car. It is best to only get the loan for the amount of time that you plan to own the car. This way you don't get stuck paying on a car you no longer own.
If you are a homeowner you can take out a Home Equity Loan to finance a new car. The interest paid on these types of loans is tax deductible but they include a lot of up front fees when opening them, such as application fees and closing costs. These loans also use your house as collateral and will put your home in danger if you cannot make the payments.
Before you go on to finance your new car make sure to explore all of your options first. Knowing what a lender is looking at and what impact it can have on your loan will keep you from being surprised along the way.
To make the process easier, get your financing first before you begin looking at cars, then you know what you can afford and will be less likely to be tempted by the more expensive models showcased on the dealership's show room floor. The more options the better when it comes to selecting a type of financing to help you buy a new car.