Buying a vehicle? Here’s what you need to know.
It isn’t a secret that the car buying process can be stressful. Between haggling with dealers and finding the perfect new ride, details of your auto loan may be put on the back burner. Before you take your first test drive, here’s what you need to know to ensure the process goes smoothly and you get the best deal.
Pros & Cons of 0%
Some dealerships have promotions that offer cash rebates or no-interest financing for a new vehicle purchase. While these offers may seem attractive, it’s important to weigh the pros and cons first. Sometimes a cash rebate combined with a low-rate auto loan can be a smarter option vs. a 0% APR loan. A cash rebate used to reduce the overall cost of the vehicle may lower the loan amount, resulting in higher savings over the life of the loan.
Plus – zero-percent financing is not guaranteed for everyone. Usually, it takes an excellent credit score to qualify for zero-percent financing, and sometimes zero-percent financing only applies to certain vehicles.
Get Pre-Approved
To ensure you are receiving a better-than-market auto loan rate, get pre-approved before you head to the dealership. On average, the hidden interest rate added by dealers is 2.47 percent and can even hit 5.04 percent with a weaker credit score.
Beyond the interest rate, getting pre-approved can help seal the deal during your purchase negotiations. With a pre-approval letter, you will stand out among other buyers and dealers will know you are actively looking to make a deal.
Already bought? Now what?
Opps – already bought a new vehicle with a high-interest auto loan? Refinancing your auto loan may be a good fit. To see if refinancing is right for you, compare interest rates and terms with local financial institutions. They are going to offer the best auto loan rates compared to dealerships.
Next, look at your monthly payment. Even if it only drops a few dollars, you could end up saving hundreds of dollars during the life of your loan.
Regardless if you are in the market for a new car or looking to refinance, working with a local financial institution that you can trust will ensure you receive the best auto loan rate and the best overall deal on your new set of wheels