Lowdown On Loans
THE LOWDOWN ON VEHICLE LOANS
FIVE ESSENTIAL TIPS FROM THE FINANCE EXPERTS
There’s a lot more to buying a new or pre-owned vehicle than just selecting a model that fits your needs and negotiating the sticker price. Understanding your personal credit and the variety of lending options available are all part of the homework.
1. KNOW YOUR CREDIT SCORE
Your credit score paints a picture of your finances and helps lenders determine the likelihood that you’ll be able to payback your loan. Like a test score, the higher your credit score, the better your credit and the interest rate you’ll receive. Nearly 46% of auto buyers have less-than-perfect credit. Knowing your credit score before you walk into a car dealership will eliminate the risk of being saddled with a higher interest rate than you want or need to pay. Only those with the best credit ratings qualify for enticing zero or low Annual Percentage Rate (APR) financing that is often advertised. Government regulations make it possible for you to request a free copy of your credit report once every 12 months from one of the nationwide credit reporting companies – Equifax, Experian, and TransUnion.
2. CHECK FOR INCENTIVES FROM THE MANUFACTURER
Before you head out to shop for a new vehicle, be sure to compare the latest car incentives offered at dealerships in your area. Resources like Edmunds.com keeps car shoppers informed with regularly updated information on cash rebates, financing offers and leasing deals that are currently available. Carmakers often offer sizable rebates on new cars, trucks, SUVs and vans. If you have to choose between 0% financing and a cash-back rebate, run the numbers using one of the many online calculators available to determine which is worth more in the long run. Sometimes a rebate is worth more. Be sure to straight up ask for all available incentives, rebates and any loyalty programs the dealer may offer.
3. DON’T LET NEGATIVE EQUITY BECOME A NEGATIVE
When someone owes more on their car than its worth, they have negative equity. Frequently referred to as being upside down, people with negative equity need to pay special attention to misleading vehicle trade-in offers that promise to pay off their entire loan. Although an ad may entice buyers to think that by trading in their vehicle they will have no further responsibility for their old loan, some dealers may roll the negative equity into your new car loan. If you’re faced with negative equity, consider purchasing a less expensive car or making a higher down payment to offset some, or all, of the negative equity. Not only will you save on finance charges, lenders will reward you with better rates.
4. LOW APR CAR FINANCING: TOO GOOD TO BE TRUE?
While bargain car loan rates – for both new and pre-owned cars – are frequently advertised, estimates show that as few as 7% of consumers will qualify for the 0% or low Annual Percentage Rate (APR) financing car manufacturers tout. APR is the yearly interest rate that a borrower is charged by the lender. When trying to unravel the complexities of loan options, your best bet is to let your bank, credit union or a member of the finance department at a reputable dealership give you guidance. These experts will shop for the best rates available based on your credit score.
5. KEEP LOAN TERMS SHORT AND KEEP MORE OF YOUR MONEY
While shorter loan terms require higher monthly payments, they also come with desirable lower interest rates. It can be tempting to stretch out a loan to watch the monthly payment drop, but a lower monthly car payment can end up being more expensive than a higher one. Even so, 30% of all car loans are for six years, according to J.D. Power and Associates. A smarter plan is to opt for a vehicle that you can comfortably pay off in three to five years, which will reduce your total cost of ownership by thousands of dollars. Also avoid rolling miscellaneous expenses – like sales tax and registration fees – into your loan. And while it may seem obvious, putting a sizeable payment down on your car will also help you increase your equity in the vehicle, create a more flexible trade cycle and lower your monthly payments.
A WORD FROM THE SPONSOR
Cable Dahmer Chevrolet has been serving the automotive needs of Kansas City since 1963. Nearly six decades of experience has given us invaluable expertise, which we put to your advantage. People are tired of stress, pressure, and sneaky sales tactics. Instead, they are looking for a trusted advocate to guide them through one of the largest buying decisions of their lives.
You can count on the Cable Dahmer team to teach you what you need to know to buy or service your vehicle. We hire competent, honest, friendly professionals who care about building a lifelong relationship with our customers. Your new or used vehicle comes with a long list of added benefits that only Cable Dahmer offers:
- “No Worries” Exchange
- COMPLEMENTARY Loaner
- Free Lifetime Nitrogen Tire Refill
- Free Scratch & Dent Repaired for Free
- GUARANTEED Fast Service
- First Dent & Scratch Repaired Free
- Free Annual Missouri State Inspection
- LIFETIME WARRANTY
- A DIFFERENT KIND OF CAR COMPANY!
Your complete satisfaction is our number one priority. Experience the Cable-Dahmer Difference and you’ll know why we’re leading the pack in customer loyalty.