AUTO FINANCING BASICS

 

 

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4 IMPORTANT TIPS YOU MAY NOT KNOW ABOUT USED VEHICLE FINANCING


Do you know what the basics are behind auto financing? If you don’t, then you may not realize that there are four general concepts to it.

1.  Pre-Approval Car Loan
If you already know what vehicle you’d like to own, you’ll need to get auto financing. The best thing you can do for yourself is to attain a loan before you see a car dealer. When you’re pre-approved for an auto loan, you’ve got more bargaining power, and can bring the price of the vehicle down lower. Basically, you may not even need the full amount that you’re pre-approved for.

2.  Dealership Vehicle Financing
Automobile financing from a dealership is called Retail Installment Sales Contracts (RISC).  When you sign a RISC, the dealer will sell it to a bank or some other lender. Some will participate in a low annual percentage rate. However, if they can charge you a higher APR, they’ll get more money from you.

Keep in mind that dealership vehicle financing is something dealers try selling you on. However, if you go to a lender before the dealership, you eliminate the dealer and don’t pay more money than you need to for the vehicle.

3.  Online Auto Financing Benefits
There are five primary benefits to getting financing online:

- You can get a lower APR than a dealer will give you
- The APR is locked in for 60 days (2 months)
- You don’t have to deal with the aggravations that come with a dealership vehicle financing
- Approvals are given within an hour so long as it’s in business hours
- Online lenders will send the check the next day after your approval

4.  Do Research
Before you sign any contract or put money down on a vehicle, you need to do some research to find the best deal possible on your next vehicle.

Tricks the dealers use – packed payments, secret increase in APR, etc. – can eliminate any discount you were able to get. Therefore, you need to calculate the monthly payment yourself.

The Internet is quite available in getting quotes; get about six of them before you start any negotiations with the dealers.

Here’s something you also need to remember: With the Internet, it’s not as difficult to get an auto loan as it once was. After all, lenders are competing with each other for your business.


    

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