How to Avoid Auto Finance Pitfalls
Consumers should view the car-buying process as three separate
transactions: negotiating the best price on the new car, getting the best loan
and getting the most money for your trade-in. Follow these tips to get the best
deal on your new car.
Steps:
- Do your homework before you buy. Consult the Internet, the yellow pages,
local newspapers and your bank for the best available prices on new and
used cars.
- Decide how much you can afford. Set a limit and stick to it.
- Focus on the lowest possible car loan interest rate, not the monthly
payment. Finance managers can pull strings to meet your monthly
payment limit, but you may pay more in the long run if you don't keep the
overall interest rate down.
- Find out what your trade-in is worth before you start shopping. Your bank,
the Internet and the Kelley Blue Book can provide both the retail price and
the trade-in value.
- Sell your current car yourself. A salesman's goal is to pay the lowest price
possible for your car, then turn around and sell it for the highest price
possible. You'll do better on your own.
- Know what your monthly payment includes before you sign anything.
Read the loan papers and make certain the purchase price, down
payment, trade-in value (if you don't sell the car yourself), and interest rate
are what you agreed upon.
- Note that car dealerships offer a variety of "add-ons" such as an extended
warranty, credit life insurance or a security system. Decide if you want
these items before you buy a car.
Many new car manufacturers offer a choice of customer incentives such
as cash rebates or low-interest financing. Figure out which is the better
deal before you make a decision.
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