What is the smart way to finance your car? This is a questions asked by many, especially since buying a car is no simple decision. Research has shown that purchasing a car for most people could well be the second most expensive purchase after a house. So getting the best deal on financing is vitally important all things considered. Here we have listed some guidelines to keep in mind before getting your car financed.
- Research all the models on offer
Different cars come with varying offers and incentives. While shopping for your car, do the necessary research. Look for models that come with the most amount of incentives being offered on that particular day. If you are lucky, you might find a financing solution with an extremely low rate of interest. Low interest rates will usually save you a lot of money during the tenure of the car loan.
- With down payments, bigger is always better
The more money you put down on your car, the better chance you have of securing a great loan with a low interest rate. Banks are uneasy when they have very little collateral to work with. The extra down payment now will help you save loads of money in the long run, mainly due to the lower loan principle amount.
- Consider the short term for better rates
Most banks offer loans at better interest rates in exchange for shorter terms. If you can afford the little extra on monthly car instalments, you should consider the short term alternative. And although your instalments may be high, on the bright side you’ll pay off the vehicle much faster and save a lot of money on accrued interest charges.
- Visit your own bank
Before sitting with your dealer’s loan officer, visit your bank and get them working on financing a deal for you. If your relationship with your bank has been an unsoiled one, you may end up getting a better deal with your bank than as was proposed by your dealer.