10 Tips to Find the Best Place to Get a Car Loan
Getting a new car can be an exciting time but can be tricky when it comes to finding loans. Here are some tips to find the best place to get a car loan.
Need a new car, but don’t know the best place to get a car loan?
You’re certainly not alone. Many buyers, especially, first-time car buyers don’t think about financing before speaking with a dealership. They go in with a monthly payment or price in mind, but don’t consider the terms and conditions of a car loan. This is completely understandable. Buying a car can be downright overwhelming. Not only are you excited to drive a new set of wheels, but most times you’re bombarded by car salesmen who want to seal the deal.
While some of these salespeople are trustworthy, we also know that it’s their job to get the best deal for their company as possible. Add on to the car buying experience, the endless amount of paperwork, fees, and extra deals that sound like a practical and great investment.
So, how can you get ahead of the car buying and loan game?
By knowing the best place to get a car loan and how to negotiate the best deal. Read on to find out exactly how to make your car buying and best car loan dreams a reality.
Finding the Best Place Car Loan
In 2018, over 80,000 cars were newly registered in Singapore. But, this begs the question as to how many of these buyers really got a good deal and a decent car loan. To make sure you get the best car loan before visiting the dealership, check out our tips for car loan success.
1. Negotiate Sticker Price
The first factor to take into account before getting a car loan is the sticker price. While dealers will try to sell you a car based on the monthly payment, it’s best to thoroughly assess the sticker price.
Attempt to negotiate the best deal on the sticker price before sitting down with the finance manager to discuss a car loan. If you don’t feel satisfied with the sticker price, then either walk away, shop around, or seek out a different vehicle.
2. Get the Shortest Loan Length
The loan length will determine your monthly payments and how long it will take to pay off the loan. However, it also determines how much interest you will pay. The more interest you pay, the more you spend towards the total cost of your car which will increase the initial sticker price value.
The shorter the loan length, the better. Typically, shorter loans tend to have lower interest rates which means less money out of your pocket.
3. Get Quotes to Beat
Get multiple quotes for a car loan before speaking with the dealership. Get quotes from banks, local credit unions, and online lenders. Dealerships act as brokers for multiple lending companies, but often times their interest rates tend to be higher.
Having quotes in hand before meeting with the dealer at least gives you a point of reference and potentially a bargaining chip.
4. Know Your Credit Score
Your credit score will play into the interest rate you receive on a loan. So, before getting quotes and certainly before meeting with a car salesperson, check out your credit score.
The higher your credit score, the better the interest rate on your car loan will be. But, be careful not to fall into the dealer’s sales tactics of receiving a super low-interest rate without knowing your credit score. Most times, these deals are only available to buyers with credit scores of 750 or higher.
5. Understand Interest Rates
The key with any loan length is to get the lowest interest rate. Pay special attention to the APR/interest rate before locking yourself into any car loan.
The interest rate will be additional money paid over the course of the loan to the lender. So, it’s vital to get the lowest rate possible.
6. Stick to a Monthly Payment
While you shouldn’t lock yourself into a car loan based on a monthly payment alone, financially it does matter. Thoroughly consider your options as well as your future stability when considering a monthly payment amount.
For example, if you intend on staying at your job for another three years and don’t expect any major changes, then a shorter loan term with a higher payment could be your best bet. On the other hand, if you’re in a transition period in your life then either a longer loan term, lower sticker price/car selection, or waiting to purchase a vehicle could be your best option.
7. Down Payment
Lenders and dealers typically don’t require a down payment on a car loan, but it’s a good idea to pay some cash upfront. Doing so will help to reduce the loan amount and in turn the interest you’ll pay for the duration of the loan.
Aim to put down at least 15 to 20% of the car loan after selecting a sticker price within your desired price range. Before considering purchasing a vehicle, you could also attempt to save $10,000 or more as a down payment.
8. Knowing Appraisal Versus Sticker Price
Understanding the sticker price is especially important if you want to purchase a car that you previously leased. When you lease a car, the car’s value still depreciates over time. But the car salesmen may still require you to purchase the car for the remaining value on the lease when you initially signed the dotted line even if the car isn’t worth nearly that amount.
While any reputable salesmen should explain the sticker price versus current value to you, not all do. Again, many car salesmen view it as running a business and looking to get the best deal for them. That’s why it’s very important to do your research and understand the appraisal value versus the sticker price beforehand.
9. Go Local
Local credit unions tend to offer lenders the best interest rates. So, before you speak with a dealership, it’s absolutely vital to get a quote from a local credit union. Doing so could save you big time over the course of your loan in interest payments.
10. Consider Extras
Carefully consider adding extras to your car loan payment in the form of extended warranties, tire protection, and other protections. While these seem like a great and wise idea on the surface, it may be possible to get a better deal from an independent company.
Ask the dealer in advance what type of extras are available on the vehicle before purchasing so you can make sure to shop around before signing the dotted line.
Best Place to Get a Car Loan
The best place to get a car loan is the place that offers you the best loan terms and price. This includes the sticker price, interest rate, and loan term in conjunction with your credit score and the actual value of the vehicle.
The last thing you want is for your vehicle to be worth less than your loan. Avoid this mistake at all costs by paying special attention to your loan amount versus the appraisal value of the vehicle.
Want to save more on your car insurance in addition to your car loan? Check out our blog post to learn 5 ways to save on your car insurance.