There are a couple of options when purchasing a vehicle. One option is to buy a car with cash, however due to the current economy, most buyers cannot do this. Financing your vehicle is another option to pursue, either through a financial institution you use for personal banking, or through the car dealer. Before you choose who to get the loan from, you should be aware of all the pros and cons of each kind of financing. This wise choice will be best for both your credit score and your wallet.
Dealership Financing
Financing through the dealer will get you good deals, but you should be very careful. Salesmen who work for the dealer make commissions from the loans that are sold to their customers, so do not let them pressure you into a loan that is not good for you. First find out who the lender is, make sure the lender has been around for a long time and has a good reputation with the industry. Never take a loan from a fly-by-night lender, who will give you problems down the road. Then, find out the interest rate they are offering.
There are times you will get great financing rates, especially at the end of the model year when the dealers are trying to get rid of those vehicles. However, most lenders will only work with a buyer that has the best credit. For those who have less-than-perfect credit, you may be charged an exorbitant interest rate, causing you to spend a lot more than you would if you got a loan somewhere else. Other aspects of the loan you should check out include the fees you are charged if you accept the loan as these can be fairly high and you could also be assessed a penalty for paying off the loan early.
Bank or Credit Union Financing
You will find several benefits when you get a loan through your credit union or bank, the first of which is convenience. Before you go car shopping you can apply for a loan so that you can have the pre-approval in hand. This lets you know the amount you have to spend, saving you from being embarrassed at the dealership when you get turned down for a loan. A credit union or bank can also negotiate a lower interest rate, which can translate to lower payments, or shorter loan term, which means you will pay less for the car. Additionally, by using a credit union or bank for car financing, you will be able to add this to your online banking account, making it easy to handle your monthly payment.
Regardless of what you decide to do, researching your options is always recommended. Never let anyone to force you into making a decision you have not thought out in fear that the car will be sold to someone else. More often than not, the best place to get a loan is your bank or credit union. If you are in the market for a new or pre-owned vehicle, call today and find out everything possible to find the perfect financing option for your budget and needs.
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