Few people are in a position to purchase a new vehicle outright. This means that most need to utilize some type of financing arrangement in order to acquire the vehicle and pay for it over time. The process of financing a car can sometimes be tricky, depending on the condition of the buyer’s credit and the type of auto finance arrangement that is pursued. If you are considering the purchase of a new or used auto, here are a few things to keep in mind.
As with any type of loan arrangement, the only way to command the lowest interest rates is to have excellent credit. In order to be in a position to shop for a car loan with the lowest rate of interest possible, it is important to make sure that your credit report is accurate and reflects the best possible FICO score. For this reason, you should obtain copies of your credit report from all applicable credit reporting agencies and review each and every item listed on the reports. Keep in mind that reviewing one credit report will not necessarily be sufficient. All too often, items found on one report do not show up on a different report. Since you have no way of knowing which credit reporting agency a potential lender will consult, it is in your best interests to make sure that all your credit reports are current and accurate.
If your credit is less than perfect, you may be tempted by some of the car finance options offered by individual lots. These often publicize themselves as being underwritten by the owner of the car lot and allow you to make a small down payment and a series of weekly or monthly payments. While this can look very attractive on the front end, keep in mind that chances are that your convenient automobile loan will probably end up costing you a great deal more than the sticker price of the automobile. You may also find the terms of the loan do not provide you with a lot of protection in the event you are late with a payment. While many of these “buy here pay here” deals are workable and do not contain obscure clauses in the terms and conditions, it is important to read the contract thoroughly before entering into this type of auto finance arrangement.
It is also important to understand laws governing the purchase of a new car or even a used car in your locality. Some jurisdictions allow buyers to return vehicles within a given time frame for any reason at all and receive a full refund of the down payment. Other jurisdictions place restrictions on both the time limit and the conditions that make it possible to return a vehicle. Since many used cars are sold “as is” and with no guarantees or warranties, it is essential to understand your legal rights before you go car shopping and commit to any auto finance terms and conditions.
Purchasing a new car is a major purchase for most people. Because of the importance associated with making a major purchase, consumers should seek the most beneficial auto finance terms possible. Make sure you understand what those terms and conditions are, how much you will ultimately pay for the vehicle, and what type of consumer protection you have due to the laws of the land. When these three steps are taken, along with making sure your credit is in order before you go shopping, there is an excellent chance that you will find an auto finance program that will be ideal for your situation.
