This article is about Tips & Guidelines of Auto Loans. The world of auto loans and vehicle financing is quite confusing. A lot of work needs to be done by you even. You have many things to take into consideration, such as how much loan can you comfortably afford, what are your terms of taking an auto loan and whether a lease loan makes enough sense for you.
Thereby, you can decide on a fair deal. A guaranteed way of finding the best auto loan rate is to study the financial companies which can only be done by requesting quotes from them and comparing them with the quotes provided by other companies so as to know that you are getting the lowest rates. In order to attain the best deal as per your financial situation, you need to know that it is essential to balance the interest rates and the length of your loan.
For that, you ought to clearly check on your monthly budget so as to choose the type of auto loan that would work out best for your situation. Moreover, increasing your down payment will save you from high rates of interests as it saves money which might be paid as interest on that portion’s of the vehicle’s cost price.
After getting well-informed on the above discussed aspects and deciding upon which type of auto loan you want to opt for, you can demand better and compromising deals from your dealer. You can negotiate their terms by asking for more rebates, higher trade-in-value of the automobile concerned and its extra features.
The last and the most important tip that may help you grab a brilliant auto loan deal is that you should buy an automobile towards the end of the month. This is so because most of the auto dealers put contests and the winner of those contests bags a good prize, which can be in the form of a monetary or a physical prize.
Generally, these contests last for a month and thus, at the month end, most of the sales persons want to crack their deals. So, it gives you an opportunity to negotiate a better price for your vehicle during these types of competition. Lower the cost of your vehicle, the better terms you get for your auto loan.
Before you actually go in for an auto loan, it is always highly appreciable of the borrower if he is aware of certain terms that are most commonly used by the auto dealers or the auto loan lenders, while making the deal. The borrower should always be well-versed with the terms on which he is finalizing his deal.
Some of the most common and important terms are explained below:
- ANNUAL PERCENTAGE RATE (APR): This is defined as the cost of credit as a yearly rate. The percentage results from an equation considering the total amount financed, the finance charges, and the terms of the loan. This is to be always kept in mind that APR is usually not the same as the interest rate.
- BASE PRICE: It is the cost of the basic model of the vehicle i.e. of the vehicle without options. The base price doesn’t include the prices of the added accessories into the vehicle. Base price can also be referred sometimes as “Sticker Price” or “MSRP”.
- DEALER HOLDBACK: It is defined as an allowance paid by the manufacturer to the dealer to allow the dealer to purchase a vehicle for less than the invoice price.
- DOWN PAYMENT: It is defined as the money paid to make up the difference between the purchase price and mortgage amount. Down payments usually are 10 percent to 20 percent of the sales price on Conventional loans, and no money down up to 5 percent on FHA and VA loans.
- MSRP: It stands for “Manufacturer’s Suggested Retail Price”. It represents the manufacturer’s recommended selling price for a vehicle and each of its options.
- STICKER PRICE: The manufacturer’s suggested retail price for a vehicle. Also called “List Price” or “MSRP” or “Base Price”.
- UPSIDE-DOWN: It describes a situation where the balance owed on a loan is greater than the current value of a vehicle.
Hence, above discussed are some of the most important aspects of AUTO LOANS and the various items, the customer should take well care of, in order to get the best loan deal for his dream vehicle.
REMEMBER: Ensuring timely payments towards the loan installments for avoiding debt is the key for successful attainment of AUTO LOANS.