Most people who buy a new or used vehicle from a dealer choose to finance their purchase instead of paying in advance. Although it makes financial sense for most people, committing an error when negotiating the terms of the car loan can eventually cost the borrower too much money. Here are five tips that will help everyone solve the problem of renting cars like a pro.
1. Credit reports sometimes contain errors.
People with lower credit scores often have to pay higher interest rates on loans, so anyone who is considering borrowing money should read the credit report well. Sometimes there are errors. These errors should be repaired before meeting with the lender. Some customers may even find that dishonest lenders may try to claim that their results are lower than they actually are. Knowing all three reports can give the borrower additional negotiating power and save a lot of money in the long run.
2. Look around for the best car loan offer.
Although dealerships often advertise low APR promotions, these rates are usually reserved for borrowers with the best credit. Many people find better conditions in a credit union or an online or social bank. If the borrower is pre-qualified for the bank, he will have a better opportunity to negotiate in the car dealership without having to legally contract with the bank. Additional tip: all credit inquiries in the same two-week period will be counted as one query in case of an impact on the report.
3. Some lenders will benefit from subprime loans.
Some dishonest lenders will offer high-interest loans to drivers with poor credit, and as soon as the driver does not receive payment, the dealer will confiscate the car and resell it. Failure to pay the loan will result in additional damage already bad credit, so borrowers should be sure that they can afford to pay before agreeing to the loan. Even subprime borrowers should look for the best APR. Requirements for car loans are usually lower than the mortgage requirements, so buyers should check if they receive the best offer.
4. Lower monthly payments can actually cost more.
One of the methods used in the automatic rental is that the dealers advertise low monthly payments and at the same time hide a higher total purchase. Lower monthly payments also extend the terms of the contract, and longer loans usually have higher interest rates. Buyers should be sure to negotiate the total purchase price separately from APY and monthly payment.
5. Read the fine print.
Before leaving the new car, buyers should make sure that the car rental process has been completed. If the lender finds that the transaction is subject to approval after it has left, he may call later and request a higher annual interest rate or monthly payment or ask for the car to be sent back to the parking lot. The small print should also say that the APR is fixed; otherwise it may increase, which may prevent you from managing your payments. In addition, some dealer points charge a penalty if the lender has previously repaid the loan.