Wednesday, October 19, 2016

Three Things You Need to Know About Financing a Car

Many people don't have the means to purchase a new or used car in cash. That is why financing is an excellent option for some individuals. It's important to understand the basic facts about financing before sitting at the sales table. Here are three things consumers should know about car finance before purchasing a new vehicle.

Choosing Direct Lending vs. Dealership Financing

Direct lending is a car loan from a bank or credit union that can be used to purchase an auto at a dealership. It allows buyers to shop around for the best interest rates and fees. Dealership financing is when a car finance loan is procured directly through the dealership. This type of financing offers the benefit of special deals and convenient hours.

Determining a Budget

Buyers must keep a budget in mind when shopping for a used car. It's important to understand how this new obligation will fit into an overall budget. Before heading to a dealer, consumers should know not only the total target sticker price but also their budget for monthly payments.

Getting Clear About Credit

Those who don't know their credit score may have trouble determining the total expected loan cost. The better the credit score, the lower the interest rate. While the dealer can pull this information during the car finance process, consumers can also request a free annual credit report to know where they stand to avoid any surprises at the bargaining table. Purchasing a new vehicle is an exciting experience. Follow these tips and you will be ready to negotiate like a pro.

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