Auto Finance

Tips and tricks for getting the best financing for your vehicle

Most people aren't able to buy a car or truck without the right auto financing. But where do you start? Who do you choose as your lender? How do you get good interest rates? These are just some of the questions that cross the mind of anyone planning to purchase a new car. Many people also worry that the great deal they received on their car will be lost by overpaying in dealer financing. Here are some tips to help you get the best auto finance:

• Choosing a Lender - Usually you'll end up paying too much if you finance through a dealer. They tend to charge high interest rates so that you end up paying a lot of money over the course of the loan. However, some dealers will offer an extended warranty and services if you finance with them. If you would rather avoid the hassle of financing through a dealer, then use an online company such as E-Loan or Capital One Auto Finance. You'll be approved in minutes online with fair financing rates. To avoid scams, be sure that the online lender is a credible company before you hand over any money.

• Interest rates - Your interest rate is what determines how much you'll have paid at the end of your loan. That's why it's important to find a credit union or online company that offers lower interest rates. Online auto financing is said to provide the best rates while the dealership offers the worst. Comparison shop and collect quotes to ensure that you're getting the best deal.
• Loan term - The loan term is the length of time in which the loan has to be paid back. Typically, the longer the loan the more money you'll be paying in interest. Don't be fooled by a company that offers low interest rates coupled with a long loan term because you'll still be paying a lot of money in the long run. Try to avoid loan terms longer than 48 months. Most of the time, people with 6-year loans will run out of money or end up paying more money than they had expected. This is especially true for first-time auto buyers.
• Financing fees - There are usually other finance fees that you'll need to pay in addition to just the interest rates, many of which the lender will not clearly address. Ask about any additional charges before signing up for a loan. Some of these charges include application fees, redemption fees (if you want to pay off your loan early) and loan insurance.
• Payout options - Many auto finance companies require you to make a down payment before you can receive your loan. Depending on the amount, this may or may not be a problem. However, an online vendor like Capital One sends you a blank check upon approval for you to purchase your vehicle. Simply fill out the check up to the approved loan amount and no down payment is required.
• Credit history - It's no surprise that many people have less-than-perfect credit scores. However, once dealers see your low scores, they will often take advantage of the situation and hit you with high interest rates. People with bad credit should never finance through a dealer - online financing is best because they don't expect you to have perfect credit. This is also good news for younger individuals who haven't built up an extensive credit history.