Your old clunker needs replacing, and you’ve decided that a new car is the way to go. At this point, you need to begin considering your options for financing. The right car loan will come with benefits like a lower rate of interest and monthly payments that you can manage with ease. In order to find the best deal, take the time to check into these two options.
Since you are buying a new car, it never hurts to see what type of car loan you can get through the dealership. Dealer financing offers the benefit of being quick and easy. You can fill out the application on the spot and often have an answer in no more than a day or two. The nice thing about this approach is that you can often bundle the cost of the auto insurance right into the monthly payments. Since the lender will require you to maintain car insurance anyway, this approach will mean that there is one less obligation to track each month.
When considering the merits of new car dealer financing, always be on the lookout for any type of additional fees. The terms of the loan may require that you make a down payment of a certain amount. As you read further into the contract, you may also discover that there is a service fee that is applied every time you make a payment. There may even be a loan processing fee that is bundled into the total amount of the loan once it is approved. Being aware of these extra charges can help you decide if the overall deal is really best for you.
Assuming your credit is in good shape, there is the option of approaching your bank to obtain a car loan. Many people are surprised to learn that the rates of interest and the general terms that apply are very competitive with the loans offered through a dealership. In addition, the bank loan may not include as many extra fees and charges as the loan offered through the dealer.
Weighing Your Options
Your goal is to project the amount that you will repay with each type of car loan you are considering. The lenders can help you with this process by providing a bottom line figure that is based on the assumption that you pay off the loan on time, and do not make any payments ahead of schedule. Once you see those bottom line figures, it will be much easier to determine which lender is really offering the best deal.