Some simple research can put you in a better position when you’re looking for a new car loan, or refinancing an existing one. Arming yourself with the proper information ahead of time can save you both time and money in the long run.
Know your FICO score and other items on your credit report. The FICO score is calculated using various ratings, such as how much debt you currently hold, whether you pay your bills on time, etc. This number is used by every lender as part of their approval procedure, and will have a great deal of impact on whether you qualify for a loan and if so, what kind of deal you will qualify for.
You can get current copies of your credit report from the 3 major reporting services:
Equifax: PO Box 740241, Atlanta, GA 30374 http://www.equifax.com
Experian: PO Box 2002, Allen, TX 75013 http://www.experian.com
Transunion: PO Box 2000, Chester, PA 19022 http://www.transunion.com
Next, don’t assume the lowest interest rate is always the best deal. Many dealers offer 0% interest, especially right before the new model are due to be released. In some cases it may be better to opt for a cash rebate rather than a 0% loan.
For example, if you opt for a 4% loan (36 months) with a $2000 cash rebate your payment can be lower in some cases than they would with a 0% loan but no rebate.
It’s a good idea to get pre-qualified for financing, before going shopping for a new vehicle. You’ll know ahead of time how much you can afford and you’ll have a better idea of a budget for your new vehicle.
This also puts you in a better negotiating position with the dealer. Their deals are partly based on whether you use their financing or not. If you have alternate financing available, you may be able to negotiate a better deal if you use their financing.
Make sure you run the numbers both ways to see which is the best offer before you agree to dealer financing. In some cases, it can even be worthwhile to finance through the dealer and then refinance shortly after purchasing with your own lender. There are normally feeds involved for doing this, and some agreements may not allow refinancing so be sure to read the offer thoroughly if you are considering this.
Finally, be sure you weigh the advantages and disadvantages of leasing versus purchasing. There are some cases where the tax advantages of leasing can wind up being a better deal than purchasing.
Do your homework before rushing into a purchase and you’ll be able to save time and money, as well as having the satisfaction of knowing you got the best deal possible.