If you are looking for a new car, you are probably considering how you are going to get the money to pay for it. You could save up and pay cash for a new car, but most likely, you are going to end up having to get a loan. When obtaining financing for your car, you should make sure to avoid a few key mistakes.
Negotiate Price Of The Car Not The Payment
The first thing you do is negotiate the price of the car as opposed to your monthly payment. The reason is that the price on the sticker is not the price you should be paying. Even if you have to walk out of a couple dealerships to get your price, hold out for at least 500-1000 dollars less than sticker price. Your monthly payment is not going to equal the price of the car after interest and other fees are tacked on.
Don’t fall for extras like Gap Insurance and VIN etching that you don’t need. This will just add profit to the deal for the dealership. It is another reason why you should keep the purchase price and the payment negotiations separate.
Make Sure You Don’t End Up Owing More Than The Car Is Worth
The typical car loan is 60 months. You can stretch the loan out longer to reduce your monthly payment, but you may be paying more than the car is worth. The best thing to do is to pay off the car within 60 months even if you have to make extra payments to catch up. This will help you build equity faster and allow you to get more when you trade it in down the line. Interest rates have dropped in the last couple years and there are many options like a Wells Fargo refinance auto loan that might be able to lower your interest rate and payment.
Secure Financing Before You Shop
Go to your bank or credit union before going to the dealership. Often times you will get a better rate, and you know how much you can spend before you start shopping. This will help guide you to the car you can afford, and not to the car your dealer can make the most profit on.
When it comes to shopping for a car, you should understand how to get the best deal for you. Secure financing beforehand if possible, and never think that a lower monthly payment is always in your best interest. Knowing what you need and what you can afford will benefit you in the long run.
Bio: Sean is an expert in the automotive industry. Having been in the industry for over 20 years he helps people obtain cash for their cars. Furthermore, he also helps save the environment by offering junk car removal.