Typically,
paying cash is the least expensive way of buying a
vehicle. But, we all have times
where cash is not an option. Below are some suggestions
of alternate payment.
The different types of payment:
Borrow from a dealer.
Convenience and the short amount of time for
processing the loan and terms is one of the big reasons
to set up financing with the actual dealer. Also,
dealers are the most likely to set up credit for people
with shaky credit. Although some of the smaller dealers
have in house financing this can be the most stress free
way for someone with less than perfect credit or credit
problems.
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Borrow from a bank, credit union, or finance company.
Most in
this category are "haggle-free" also. They do usually
have set non-negotiable interest rates though. Compared
to banks and finance companies, credit unions usually
have the lower interest rates as well as finance
companies usually have the highest ones.
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Borrow on a home-equity loan.
The great
thing about borrowing on a home-equity loan is that the
interest in a home-equity
loan is usually tax deductible. The downside is that
your house ALONG with your car is on the
line if you for some reason default on the loan. Also
note that revolving credit lines based on home-equity
require you to make payments of only interest, not the
principal amount.
TIPS
1. If you
know already that the car you want you will have to
finance, get your loan approved before going to dealers.
Most people get their home loans approved before buying
a house treat this the same way. That way you have added
firepower on negotiating. You may not even have to use
the full loan amount!
2. Dealer financing. Is it a loan or not? In the car
business dealer financing is known as Retail Installment
Sales Contracts (or RISC's for short, an appropriate
acronym). The dealer signs the RISC's with you, then
sells it to a bank or other lender. Sometimes they
participate in the interest rate, so the higher the APR
(annual percentage rate) they can charge you the more
money they get. Dealer financing is just something else
that dealers "sell" you, by going to an outside lending
place you are cutting out the middleman (the dealer) and
not paying any more than you have to for financing.
3. What are the benefits of On-Line financing?
-Usually you pay lower APR to online lenders than you
would at the dealer, and no scams!
-Your APR is locked for 60 days
-Avoid headaches, scams, and frustration of dealer
financing
-Approvals are usually within an hour during business
hours
-You don't pay hidden fees, points, or prepayment
penalties
-Online lenders FedEx your check the next day after
approval
-Less chance of the dealer calling you up later to tell
you the financing fell through |
for 45 days, keep it running for just $15.00 a month!
