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How to Find Appropriate Financing for Your New Vehicle Purchase

Buying a new (or new to you) vehicle is a fun experience. The feeling you get when driving it off the lot is almost like bringing home a new baby. Unfortunately, unless you’ve followed our advice and saved, saved, saved, in advance… financing is a vital aspect of this process. There are many car loan options in the market today, some are better than others. Finding the right car loan is essential in making a good purchase. Now is the time to start looking at options in your area.

Should You Borrow Through a Dealer?

Car dealers are anxious to make sales. In times of soft auto sales, many dealers are willing to discount their vehicles in order to sell as many as possible. One of the incentives that many dealers offer is a great financing package. Some dealers are even offering car loans at 0% interest for several years but usually only if you buy a new (from the factory) vehicle. But as long time readers know you lose a great deal of value buying a new car. Just driving it off the lot can cost you thousands of dollars.

Online Options

There are a variety of online lending options today. In fact, this is one of the fastest growing areas of financing today. However, customers need to be careful to conduct thorough research before putting personal information online. When looking through car loans online, it is vital to know what you are looking at. Although the interest rate is an important factor to consider, make sure to look at the fees as well. High fees can completely wipe out any savings that you get from a low interest rate. Make sure to run a variety of scenarios before deciding on the best car loan for your purchase. In addition you need to be sure that you are dealing with a responsible lender. After all the 2008 financial crisis was precipitated because lenders were loaning money “willy-nilly” to anyone with a pulse.

Clubmoney is an online lender in Australia and they say that a “Responsible Lender” will review all loan applications to make sure that a person:

  • Has a stable job
  • Demonstrates at least 90 days of problem-free banking
  • Has no other short term loan commitments
  • Does not display problem gambling behaviour.

Community Banks or Credit Union

A community bank or Credit Union is a great option for people who want to get automobile financing. Community banks are often a better option than large banks for a variety of reasons. Not only is the customer service better, but they often have a better understanding of the local market. You can easily conduct research online to find the best local bank in your area. There are many people who love the experience they receive getting financing for their new vehicle from a local bank.

Unfortunately, credit unions have been reporting that the vast majority of borrowers under 35 are not asking the right questions when they come in for a loan. Instead of asking what the interest rate is they are asking “What is the smallest payment I can get away with?”. That is exactly the wrong way to look at the problem. The smaller your payment the more interest you will pay over the life of the loan. You should be looking to put as much down as possible, pay it off as quickly as possible and get the lowest interest rate possible.

Overall, the process of buying a vehicle is fun for many people. A new vehicle is a major purchase, so it makes sense to spend a lot of time making the right decision. There are many people who buy a vehicle too quickly and end up regretting their decision. Don’t make that mistake! Buy the right car at the right price with the right financing.

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