Car Loans are Cheap, but your Cash is not – Tips to help you get Value for Money

Oct. 24, 2013 - PRLog -- Car loans have become extremely economical in this economy. Even, bad credit borrowers and people with bankruptcy are able to get low rates on car financing. But, remember there’s no such thing as a free lunch. Just because things are available easily, it doesn’t mean that they are good for you. Even if auto loans can be accessed at affordable rates, you must opt for them only when you can afford them.

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Choosing a Good Car Loan that offers Best Value for your Money

Whenever you want to get a good car loan that’s absolutely perfect for you, you must understand the entire car financing process. It is important to pay attention to the process because it can make or mar your credit score.

1. Work on a Budget

It’s important that you work hard on a budget so that you don’t have to work hard on your monthly payments. Preparing a budget is very important because it will successfully distract you from destructive loan programs. Know your income and expenses for future months so that you can deduce the ease in making loan payments.

Also, you must keep your documents ready. If you have your income and employment details with you, the lender will be able to judge your car loan request quickly.

2. Down Payment to knock-down the Price

Down payment is the essential ingredient for car financing success. When you put money down, your total loan cost reduces. This means you have to pay lesser in terms of interest. So, get together at least 10% of car price as down payment.

There are other ways of making a down payment if you are short of cash. You can trade-in your old car for a new one. You can even ask the dealer to use your rebates as down payment. This way you will be able to make down payment without spending any of your money.

3. A Used Car as your Car

When you want to save money on car loans, you have to reduce the loan amount. And, what better way of reducing the loan cost than a used car. You can get a reliable pre-owned automobile for just $10,000. This is extremely low when compared to new cars that are available for more than $30,000.

4. Making the Decision

To choose an ideal car loan, analyze the loan quotes critically. Don’t just concentrate on the monthly payments. There are loan terms that offer lowest monthly payments but are excruciatingly longer. You don’t want to choose such loans because they increase chances of upside down.

Take a look at the APR. It manifests the real yearly cost of your loan after taking into consideration all the fees. It shows a better picture than monthly payments. Also, check for miscellaneous things like penalties and fees, payment schedule, etc. It will help you to select the loan that’s best for you.

So, that’s how you can get a bigger bang for your buck. Don’t forget these great pointers when you start shopping for a good car loan.