The first car that I ever owned was a 1965 Buick Wild Cat convertible. My parents paid $1,100, brand new and never had to take out a loan to pay for the car. The world has changed dramatically during the last 40 years though and cars have quadrupled in price, with some cars costing as much as a home and interest rates climbing higher and higher. Buying a car in today´s requires financing for most people and knowing how to get the best deal can save a great deal of money.
Many car shoppers for years opted for taking out short term, 3-5 years, auto loans. Today however some people are looking to cut the amount of their monthly payment by taking out a longer term, 6-8 years, as a way to cut monthly expenses. While a longer term loan can lower you
r monthly payment, they also come with inherent risks and expenses. Longer term loans usually carry a higher interest rate, increasing how much you will end up paying for the car, so while you´ll spend less monthly, you´ll pay more overall. Instead of taking out a longer term loan, think about the following ways that you can lower your payments without increasing your overall costs. Here are a few tips.
Think about getting a home equity loan to pay off the auto immediately. Home equity loans can offer a much lower interest rate than the standard auto loan.
Before you march into the dealer, try to get your loan pre-qualified. Dealer´s financing comes at a generally higher interest rate that a bank or finance company usually offers. As with any loan, interest is the snake in the grass that few see until it is too late.