Saving on Car Loans - Do Your Homework

Doing some quick and easy research prior to buying a new vehicle or refinancing an existing one can provide tremendous benefits.

Be informed of what your credit reports contain and what your FICO rating is. The FICO score does not tell the finance company your entire history and it’s not a good way to determine if someone is fit for financing; however, it is a heavily relied upon rating when determining eligibility for loans as well as interest rates.

Prior to shopping for vehicle financing you should obtain current copies of your credit reports from all three of the major bureaus and read them throughly.

Equifax: PO Box 740241, Atlanta, GA 30374, www.equifax.com
Experian: PO Box 2002, Allen, TX 75013, www.experian.com
Transunion: PO Box 2000, Chester, PA 19022, www.transunion.com

Once you have examined your credit reports and know where you stand take a look at the offers the dealer might have for you. A no interest loan may sound like a bargain but by using an online loan calculator you might determine that by taking the 4% rate with a $2000 cash rebate that you save $30 per month and that you save over $1000 over the life of the loan. Use these online calculators to evaluate the numerous scenarios that the dealer may present you with.

Also, be sure to arrange for financing before you go to the dealer. By doing this you will already know what the car you want will cost you, how much you can afford and what the payments will be. This will also provide a potential bargaining chip since the price they offer is often dependent on if you accept their financing offer. You can again evaluate numerous scenarios to find the ideal one. If they have a low enough purchase price you can always accept their offer an refinance with another lender later.

You also need to weigh the pros and cons of leasing via an auto loan versus using another means of financing such as a home equity loan or personal line of credit. Many home equity loan agreements don’t require you to spend the money on your house and can often offer lower rates than an auto loan would.

Using your creativity can be very helpful when financing a vehicle.

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