Financing a
New Car
If you decide to finance
your car, contact lenders directly. This is
because the financing obtained by the dealer,
even if the dealer contacts lenders on your
behalf, may not be the best deal you can get.
Because offers vary, shop around for the best
deal, comparing the annual percentage rate (APR)
and the length of the loan.
When negotiating to
finance a car, be wary of focusing only on the
monthly payment. The total amount you will pay
depends on the price you negotiate, the APR, and
the length of the loan.
Sometimes,
dealers offer very low financing rates for
specific cars or models, but may not be willing
to negotiate on the price of these cars. To
qualify for the special rates, you may be
required to make a large down payment. With
these conditions, you may find that it is
sometimes more affordable to pay higher
financing charges on a car that is lower in
price or to buy a car that requires a smaller
down payment.
Consider the terms of the
financing and evaluate whether it is
affordable-before you sign a contract to
purchase or finance the car. Make sure before
driving off the lot, you have a copy of the
contract that both you and the dealer have
signed and be sure that all blanks are filled
in.
Credit insurance is not required by
federal law but some dealers and lenders may ask
you to buy credit insurance to pay off your loan
if you should die or become disabled. Before you
buy credit insurance, consider the cost, and
whether it is worthwhile. Check your existing
policies to avoid duplicating benefits. If your
dealer requires you to buy credit insurance for
car financing, it must be included in the cost
of credit. That is, it must be reflected in the
APR.
Trading in Your
Old Car
Discuss the possibility of a
trade-in only after you have negotiated the best
possible price for your new car and after you have
researched the used car value. Check an
automobile blue book that can tell you how much
it is worth. This may help you get a better
price from the dealer. Generally, you will get
more money if you sell the car yourself-even
though it takes more time.
Considering a Service
Contract
Service contracts provide for
the repair of certain parts or problems-at
additional cost. These contracts are offered by
manufacturers, dealers, or independent companies
and may or may not provide coverage beyond the
manufacturers warranty. Remember that a
warranty is included in the price of the car,
while a service contract costs
extra.
Consider these questions before
deciding to purchase a service contract:
