Dealing with auto financing is an intimidating prospect for most people. The average consumer holds onto their vehicles longer and longer these days, and it can be many years since you've had to buy a car. Since it isn't something that you deal with on a daily basis, it's difficult to know the ins and outs. Once you understand a few simple truths about how financing actually works, you're in a better position to make a great deal for yourself.
Zero percent may not be the best deal
Those commercials advertising zero percent interest rates are tempting, particularly if you have excellent credit and might qualify for them. But they may not be as fantastic as they sound in the long run. According to Bankrate, dealers are not as motivated to bargain with you on pricing with a zero percent loan because they won't be making as much money on it. You can also only select one major offer or another - the zero percent loan or the manufacturer's rebates. Those rebates the manufacturer is offering look pretty good, too, and you can't take one if you opt for the zero percent interest rate.
Used cars may not be cheaper than new ones
Many car shoppers think that a used car is a better deal because it would be less expensive than a new car. That may not be the case, according to Edmunds.com. The rebates and other deals offered on new vehicles are not offered for used vehicles. They also tend to be financed at a higher percentage rate than new cars, making them more expensive over the full length of the loan. Dealerships are also highly motivated to move their stock of new vehicles, so they are more likely to make steep deals on those cars.
Your car is worth more than you think
A common belief among those shopping for a new vehicle is that the dealership will offer them a decent price for their old vehicle as a trade-in. Dealers frequently need to replenish their stock of certified used vehicles, and trade-ins are a good way to do this. In reality, however, the dealer may not offer you the best price possible. Their goal is to replenish their stock at a low rate so they can make more money on the vehicles. A better idea is to contact a company such as junkcars.com to see what they will offer you for your car. It will most likely be much more than you expect, and you can use that money toward your down payment.
Navigating the world of car loan financing is not as impossible as it seems. The key is to think through the facts in front of you rather than leaning toward the more emotional end of the experience. Make sure you find the best options so that you can get the car loan that is right for you and for the car of your dreams.