After the car has been test-driven, the papers have all been signed and the keys are in hand, you’re likely more worried about getting your new car home and showing it off than you are about whether or not you got a good deal on your car loan. But as the excitement wears off and the first payment draws closer, you may find yourself asking: how do I know I got a good deal on a car loan?
You should ask this question well before you ever step foot onto the dealership’s lot! Coming to the dealership prepared with the information you need will cut down on your stress dramatically when it comes time for car shopping. This way, you won’t spend the next five years driving your car, wondering, “how do I know I got a good deal on a car loan?”
Consider your car loan history before anything else. Have you ever financed a vehicle before? Were the payments all made on time, and did I pay the loan off early? Or was the vehicle repossessed when I lapsed on making the payments? Your previous car loan history will have a big impact on whether or not you get the car loan you’re after.
Next, researched the make, model, and year of the vehicle you want to buy. If it’s brand-new, you may want to consider waiting to see what it’s resale value will be later on, or if it’s a reliable model. If it’s used, you’ll want to check around with other owners to see how well their vehicle help up over the years of use.
When you’ve decided on the vehicle of your dreams and finished your research, you should check out where you’re going to get your insurance coverage from. Getting a car insurance estimate is something you definitely want to do ahead of time, so you won’t be surprised at high how the rate is when you decide to bring home a high-risk sports car. Most dealerships require you to have an insurance policy in place before driving the vehicle off the lot, anyway.
You may think you’re ready to head down to the dealership and pick out your car, but you’re not quite there yet: before you even begin negotiating, you should research and apply for loans on your own. Many people don’t realize that you don’t have to secure your auto loan through the dealership you’re purchasing your car from – if you can find a better rate somewhere else, go for it!
Make sure you set aside a few weeks to apply for loans and get notification of approval. Remember, just because you’re approved, doesn’t mean you have to accept the loan. Compare the loans that you’re approved for, and figure out which has the best terms for you. Low interest is a key factor in this case.
Now, head to the dealership, and after you’ve settled on the car and the purchase price, let the dealer know that you’ve already got your loan in place, but you’re willing to secure a loan through the dealership if they can offer better terms. They may be able to go even lower on interest, since they make more money if you secure a loan through them. Now, when you’re driving your new car home, and you wonder, how do I know I got a good deal on a car loan? You’ll know you did, because you did your research, and came prepared.