In an ideal world, people would be able to buy what they need in cash and walk away without having to worry about future payments. However, the reality is that some things are just far too expensive for an immediate full payment. These include new cars and new homes. While you can conceivably save up for the full price, the reality is that many need a car sooner rather than later. This is why they bite the bullet and use vehicle finance to make their purchase right away. If you plan on taking this route, then consider the following:
Shop for Lowest Price
The listed price is usually not the final price. If you try to negotiate with the dealership, then you may find yourself slashing the numbers quite a bit. Make it clear that you are prepared to walk away if they are not able to accommodate your requests, and that you are inclined to go to other dealerships to negotiate a price with them. Get multiple quotes and note the lowest options. Call these offices back and forth to inform them of the lowest price. Ask them if they can beat this for you or not.
Mind the Interest Rate
Once you get a vastly discounted price, you should focus on negotiating a good deal on the car loan. You can go for in-house financing or find another lender with favorable rates. The dealer’s rates will be your benchmark. As usual, you should shop around for affordable loans. The interest rate should be competitive given the prevailing average. If you have a good credit score, then it should not be hard to secure low interest. This should be your main concern and not the monthly rate.
Pay It Back Quickly
One way to reduce the interest rate is to get a short loan term such as one or two years. If you can’t handle the monthly payments in this schedule, then go for whatever period you can manage. Just pay it back as quickly as you can so that you don’t ever get into the problem of having to deal with defaults due to unexpected financial challenges. This will provide you with peace of mind. The rates tend to go higher as you extend the term so try not to make it last for more than 5 years.
Vehicle finance should be easy if you know what to expect.
