The Right Auto Loan for You!

1.        Monthly Payment

It’s good to know your monthly budget. It’s a bad idea to shop for your auto loan based on the monthly payment alone. There are several ingredients to a loan, and all can be manipulated to make the monthly payment appear low. Meanwhile, you’re still getting a bum deal. Shorter term loans save you money in the long run

2.         Stretching Out the Payments

Along the lines of #1, a longer auto loan term can keep monthly payments low. However, you’ll pay more in interest over time. It also takes longer to eliminate the auto loan, which could last longer than your affection for the car. Sometimes you end up owing more on the car than it’s worth.

3.        Look at the Big Picture

The terms of your auto loan will determine how much you pay now and how much the auto loan costs overall. Remember that a low cost now may not mean low total costs for you in the big picture. For example, most borrowers choose a low down payment because it’s easy to manage today. Trade-in the car you’re driving now and put as much down in cash as you can to minimize the long term cost of the car.

4.        Consider Insurance

When you ask various lenders what they’ll offer you, you may find that you need specific insurance to get the best auto loans. Make sure you have low cost alternatives to best suit your needs.  Some lenders even offer specialized products that protect their interest and your credit.  These are usually a very good value.

5.        Avoid Prepayment Penalties

Things change in life and flexibility is important. Your auto loan should also be flexible. Find a lender that will allow you to make extra payments or pay off the loan entirely without any penalties. It’s important to read the fine print – some penalties aren’t called “penalties”.

Make sure the lender and dealer you buy a car from has been in business for some time and has your best interest in mind.