Many new car dealers advertise unusually low auto credit interest rates and other special promotions. Ads promising high trade-in allowances and free or low-cost options may help you shop, but finding the best deal requires that you carefully compare the different offers.
A number of factors determine whether a special offer advertised by a particular dealer provides genuine savings. The auto credit interest rate, for example, is only part of the car dealer’s financing package. Terms like the size of the down payment and the length of the loan also affect the total financing cost.
A call or visit to a dealer should help clarify details about low interest loans. During the process, you should consider asking these questions:
Many times, a low auto credit interest rate is offered by a manufacturer in lieu of a rebate. Will you be charged a higher price for the car to qualify for the low-rate financing? Would the price be lower if you paid cash, or supplied your own financing from your bank or credit union?
Often, a low interest rate is tied to the amount of equity a lender has in a loan. Therefore, does the financing require a larger-than-usual down payment? Perhaps 25 or 30 percent?
A special auto credit rate can be tied to the loan term. Are there limits on the length of the loan? Are you required to repay the loan in a condensed period of time, say 24 or 36 months?
Is this a traditional loan, or is there a significant balloon payment —possibly several thousand dollars — due at the end of the loan?
Are there any special options required to qualify for the loan? Do you have to buy special or extra merchandise or services such as rust proofing, an extended warranty, or a service contract to qualify for a low-interest loan?
What about the time frame? Is the financing available for a limited time only? Some merchants limit special deals to a few days or require that you take delivery by a certain date.
Does the low auto credit rate apply to all cars in stock or only to certain models?
Are you required to give the dealer the manufacturer’s rebate to qualify for financing?
A number of factors determine whether a special offer advertised by a particular dealer provides genuine savings. The auto credit interest rate, for example, is only part of the car dealer’s financing package. Terms like the size of the down payment and the length of the loan also affect the total financing cost.
A call or visit to a dealer should help clarify details about low interest loans. During the process, you should consider asking these questions:
Many times, a low auto credit interest rate is offered by a manufacturer in lieu of a rebate. Will you be charged a higher price for the car to qualify for the low-rate financing? Would the price be lower if you paid cash, or supplied your own financing from your bank or credit union?
Often, a low interest rate is tied to the amount of equity a lender has in a loan. Therefore, does the financing require a larger-than-usual down payment? Perhaps 25 or 30 percent?
A special auto credit rate can be tied to the loan term. Are there limits on the length of the loan? Are you required to repay the loan in a condensed period of time, say 24 or 36 months?
Is this a traditional loan, or is there a significant balloon payment —possibly several thousand dollars — due at the end of the loan?
Are there any special options required to qualify for the loan? Do you have to buy special or extra merchandise or services such as rust proofing, an extended warranty, or a service contract to qualify for a low-interest loan?
What about the time frame? Is the financing available for a limited time only? Some merchants limit special deals to a few days or require that you take delivery by a certain date.
Does the low auto credit rate apply to all cars in stock or only to certain models?
Are you required to give the dealer the manufacturer’s rebate to qualify for financing?
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