Financing a New Car

• New Car Financing

You are among the minority of people who pay cash, you need to quickly become consumers of information about financing problems if you are considering buying a new car. For new buyers, one of the biggest cost is the purchase of new car loan interest rates make buying possible. However, there are various ways to finance a car, and knowing your options can help you save money.

• Can pre-approval plus

Just like you want to pay the best price for a car, you should also comparison shop for the best deal on car loans. And the ideal time to shop for a car loan before you shop for a car.

Getting your loan preapproved before you start looking for a car like shopping with cash. You can drive a car on the right side of the lot – no more waiting for loans will be approved and disbursed and taking the check back to the dealer. In most cases the loan can be approved by your lender within a few days.

• Shop Around Financing

All lenders are not the same. You can save hundreds of dollars by shopping around to find the best financing deal. Before you sign anything, talk with several lending institutions so you’ll know the current price of their loan. Then see if the dealer can provide a better level.
And even if you get a lower loan rate, perhaps the campaign level, so be careful when seller financing start selling. You may not need additional life insurance, accident or health insurance, additional, or extra protection for their rustproofing and undercoating.

• Borrow From a Dealer

Convenience is the word here. With many car companies have their own lending affiliates like GMAC (General Motors Acceptance Corporation) you can choose a car and a loan in one application process. This process is usually quicker than applying for loans in banks, and dealers are more likely to qualify for bank customers with less than perfect credit ratings. They also usually help customers with special needs, such as first time buyers and college graduates. Best of all, car companies sometimes offer low-rate promotional financing on certain models. (But do not expect discount financing on popular models) The downside.? Dealer financing can be more expensive, especially for ill-informed buyers. (Dealers can sometimes make as much financing as the sale itself!)
Negotiate the car price before you talk about the terms of the loan, so the dealer can not increase the price of the car to provide lower-rate loan. Even if you get low dealer financing rate of 2% to 5%, there is a catch: these loans are usually short term. Because many of which must be repaid within 24 months, monthly payments can be steep.

• Borrowing from a Bank, Credit Union, or Finance Companies

Banks and credit unions usually offer set, nonnegotiable rates, often less expensive than dealer financing. (They also tend to encourage the unnecessary expense of credit life insurance, which guarantees that the loan would be paid if you die prematurely) The membership of credit cooperatives that offer car loans. Usually offer lower rates than banks and finance companies. But finance companies – often the most expensive of all – may accept borrowers with greater credit risk.
In 1991, the IRS eliminated the income tax deduction for interest on personal loans the most. The main exceptions are the interest on home equity loans, which offset taxes on up to $ 100,000 principal no matter how you spend money.
Several banks now offer “tax-smart” loans to give back pieces of the car-lending to consumers. A tax-smart loan combines the ease of regular car loans with home equity loan tax deductions. With tax-smart loan, you do not have to go through the closing procedures and costs required by the ordinary home equity loans. And you can usually borrow up to 100% of the equity in your home. Unlike ordinary home equity loans, secured primarily on tax-smart loan car. To obtain the tax benefits, liens placed on homes as well.
While tax-smart loans may be smart to banks that offer them, they may not be as much for the borrower. A tax-smart loan is safe for banks to make: to have security guarantees from both your car and your home. The Bank usually charges the same interest rate on tax-smart loan as on an ordinary car loans, which can significantly higher than the rates charged on home equity loans.
You do not only bind the equity in your car and home for this loan, the savings you realize on the tax cut may be less than the money you save with a lower loan-level.

• Borrow Against Investments

Another option is to borrow at attractive interest rates, with flexible payment plans, on the portfolio of securities, savings accounts, or cash value life insurance policy.

• The payback is much faster, the More You Save

If you take a loan for a car, get a short payback time you can handle comfortably. While the monthly payments can be reduced by stretching them through more time, just by low interest rates, smaller loans, or short-term will reduce the total cost.
A $ 15,000 loan at 8% over five years, for example, will cost $ 3,240 in interest. You’ll save $ 672 if you paid an additional $ 62 per month for the same size loan over four years. The total interest cost would drop to $ 2,568.

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