Shopping for the Best Car Loan
The automobile today is considered to be more of a necessity than a luxury but because of its prohibitive cost, people all around the world have no recourse but to borrow money from various lending institution just to be able to purchase one. Car loans are one of the most sought after financial loans today. However, because of its cost, there is a need for you to carefully study the various loan packages offered by lending companies to get the best car loan rate. One mistake that car buyers make is to immediately shop for the car they would want to purchase. The mistake here is as soon as you find the right car for you, in all probability you will be stuck with the loan package offered by the car dealers. The right thing to do when shopping for a car is to first shop for the best auto loan among the loan company that exists in the market. You must understand that your ultimate goal when financing a car is to balance the loan’s total cost with the monthly amortization that will be reasonable and affordable for you.
To know how to get the best loan rates when financing a car, you need to compare loans being offered by focusing on the annual percentage rate or APR. APR is known to vary from day to day so knowing the lowest rate can lead you to a sizable amount of savings. Another factor is to seriously consider the term of the loan. The term of the loan can significantly affect the total cost of the vehicle and your monthly amortization for the car. Simple mathematics will tell you that shorter payment terms will mean higher monthly payment but lesser total amount of money paid for the vehicle while longer payment terms will tell you otherwise. It is therefore important to really have an understanding of your capacity to pay the monthly amortization in order for you to settle the least amount of money for the car. The most ideal number of years to pay for a car is three years. The logic here is that most cars have a life value of about five years. Therefore by paying amortization for your car for only three years, you can still recover part of your investment by selling the car after you’ve fully paid for it. This is because a three year old car can still command a good market price as compared to a five year old vehicle.
A bank loan is your best bet when financing your dream car. Local banks have generally specific and conservative loan policies thereby allowing them to offer very competitive loan rates. If you have a good credit score and standing in the community, there is no reason why a bank will turn you down for a car loan. Besides, it is common nowadays for individuals and families to have a close relationship with their favorite bank and if this is the case, your first stop when shopping for a car loan is the bank to which you and your family have personal and business dealings with.