Getting a loan on a car can be a great way to get yourself a means of transportation quickly, without having to save up for a crazy amount early on. But when it comes to auto loans, how can you tell which ones are worthwhile, and which ones are bunk? Is there any way to tell which loans are better? Thankfully, there is, and LoanMart can tell you exactly what you need to know.
Watch the APR when comparing loans
When it comes to comparing loans of different quality, one of the most important factors to keep an eye on is the APR of any particular loan. The APR, also known as the Annual Percentage Rate, is the rate of interest you’ll pay on the loan year to year. A lower APR is generally better to aim for when working towards an auto loan, as it can make up a huge sum when all is said and done. Considering both the monthly payment and the APR when buying a loan will give you the true monthly cost, and this is the number to keep in mind.
When looking into the APR, one thing to keep in mind is the length of the loan as well. One loan could have a shorter term with a higher APR and be a better deal than a longer term loan with a lower APR. Generally, shorter term loans have lower APR’s and are the better deal, but that’s not true of every loan. Keep checking in on your options over time to make sure the deal you’re getting is the best one.
Know how to Deal with Dealers
Going through a dealer is a necessary part of getting an auto loan, so a similarly necessary step for preparing to get a loan is knowing how to handle a dealer. Dealers will try and help you get you an auto loan, but they’re looking out for their own self-interests too, and will act in accordance with those interests. Dealers can sometimes try to obscure some details of your loan to get a better deal for themselves, so it pays (literally) to know what you’re in for.
One of the most important parts of dealing with a dealer is knowing your credit score. Generally people undersell their credit score, which gives the dealer a chance to talk them into a worse deal. Knowing your credit score when you walk into their office can greatly assist you when it comes to discussion time for making a deal. Having it prepared means you’ll be able to call them out and make corrections if they try to give you a worse deal because of your credit.
Make sure You do your Loan Research
Sometimes when going in on a loan, the dealer can give you a variety of different options for your loan: rebates, discounts, interest cuts, and other offers. They might all seem like great offers, but chances are one option is going to be better than the others, and the variety of offers is meant to make decisions confusing.
When given these offers, make sure to read the fine print on them and make sure you’re not being swindled. Online calculators like this one can help you compare and contrast the different offers you’re getting to see where the best deals are actually hidden. You can input things like the rebate, low interest, and other details and it’ll calculate, breakdown, and compare the different options for you right there on the site.
Other Miscellaneous Things to Look for when Loanhunting
At some dealerships, towards the end of the discussion process, the dealer might start to try and sell you on additional features and extra options. These upsells are actually where dealers can make up a ton of money after talking you down previously. A lot of these upsells end up just increasing your interest rate with optional warranties and extras that you could generally do without. Sometimes they might even try and sell you different types of insurance while you’re there – chances are you may be better off elsewhere.
When looking into a loan, one of the things you’ll want to try and look for are loans that don’t include prepayment penalties. These are penalties that can occur when you try and pay more than the necessary amount monthly or try and make extra payments. Some companies will try and hide their penalties or have other methods to try and discourage extra payments. If you see anything trying to keep you away from the early pay options, chances are you’ll want to look elsewhere for a loan.
Try and not go into any dealership with your heart set on any one car. Good dealers will be able to sweettalk you into thinking you can afford a car that you really can’t. Eventually, you’re in dire financial straits because they used enough backwards calculations and underhanded promises to make you agree to something you were never able to afford.
When going in for a loan, knowing what’s best requires knowing a number of different factors. When heading into a dealership, keeping all these factors in mind is necessary to make sure that you’re getting the right deal for you. If you can keep all of them committed to memory when you head in, you’ll be all set to get the best kinds of auto loans.