Here are five tips to help you pay less for a vehicle loan.
Don't get stuck with a bad car deal. Here are five ways to walk away from an auto dealership and save money on the vehicle loan.
1. Research invoice and make offer
Never pay sticker price for a new automobile. Before stepping foot on the showroom floor, research the vehicle. Several online websites provide the public with dealership information, such as invoice price, hold-backs and rebates. Determine a vehicle's invoice price (the dealer's costs), increase the price by 2%, and make the dealership an offer.
2. Be flexible
Timing a vehicle purchase is everything. Several auto dealerships establish monthly sales goal. If the targeted sales goal is met or exceeded, the dealership receives a bonus from the manufacturer. On the last day of the month, the dealership is more likely to offer buyer incentives and a good deal on the vehicle. To make room for new shipments, the dealership might sell the vehicle at invoice price.
3. Avoid 'No money down' loans
'No money down' vehicle loans are attractive. Buyers can walk into a dealership and drive away in a new vehicle with no out-of-pocket expense. If looking to save money on your next vehicle loan, prepare in advance and save for a down payment. With a down payment, you'll finance a lesser amount and qualify for a reduced interest rate.
4. Accept a short loan term
The average loan term is 60 months. To save money on the vehicle, think about accepting a shorter loan term, perhaps 36 or 48 months. Several auto lenders offer better rates on short-term loans, and borrowers pay less interest. Of course, a shorter term equals higher payments. Before choosing the traditional five-year term, request an auto loan quote, and review monthly payment amounts for a three-year and four-year loan. Select the loan you can afford.
5. Get pre-approved
Don't walk into the dealership without a pre-approval letter. If you want to get a low-rate loan and save money, compare rates with different lenders. Getting pre-approved for an auto loan takes minutes. Complete an application with your personal bank, credit union, finance company, or online auto loan broker. Go with the lender that offers the best deal.
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