The Right Steps To Get The Right Car Loan

Some people are better at getting car loans than others. There are many factors that determine this. Knowledge, experience, and determination level are three good ones. One of the best moves you can make, if you’re in the market for a new car, is to nail down financing before you even look at cars. You want your monthly payment to line up with the car and the payment amount you can afford without straining your budget.

When you begin to compare car loans, what you want to focus on will be the APR (annual percentage rate). This figure can vary from one day to the next. Over the long term this figure can save you a lot of money.

The loan ‘term’ is another key factor for determining the best loan. This factor can have an effect on both the monthly payment and the overall financing costs. If you opt for a shorter term, then that will mean higher monthly payments, with less being paid overall. For example, a 3-year loan will cost you less over time than a 5-year loan. You want your loan term to be as short as possible and still be easily affordable.

A longer term loan will take longer to build equity into your car. A 60-month loan may take you as long as 18 months of payments before you car is worth more than what you owe against it. So if you would want to trade it or sell it early, then you would have to settle for a price that is not enough to cover what is still owed against it. This is commonly referred to being ‘Upside Down’. It’s the same way if a car gets stolen or totaled beyond repair, the insurance payment is not going to be sufficient for paying off the remainder of the loan.

Taking a shorter plan will help you to avoid the Upside Down situation. It will at least disappears sooner, depending on the loan duration. It helps to make the largest down payment possible when financing your car, or having a good trade-in. If you can swing 15% of the overall costs, then you will have helped yourself pretty good.

One of the best ways to comparison shop for car loan financing is online. When you walk into any dealership, already armed with your loan, you are not at their mercy in regard to terms. You are in a position of power, with plenty of flexibility. You will have already nullified a lot of the sales tactics used by dealers and their sales forces. They sometimes like to mix up the financing costs with the vehicle price. It can be confusing.

A good solid place to begin a search for a car loan, would be a website like www.bankrate.com. There is a lot of good solid information there concerning national load rates. Just put your zip code in and have a look. They also have a free online calculator that is very helpful for dealing with figures. There are plenty of banks and credit unions making car loans today. That’s all well and good, but the main thing is that you, the person obtaining and repaying this car loan, goes into the deal knowing what to expect, and holding all the cards you can before-hand.