Auto Loan Must Dos
Here are 7 steps to follow when applying for an auto loan.
Simple vs. Add-on’s
- Simple loan: Your payment is going to be the same each with part going to pay the interest and part going to pay off the principal. The amount of interest you get charged is based on each months balance. If you pay off early there is usually no penalty.
- Add-on loan: The financer will charge you interest on the total amount you have borrowed. So if you have a 3-year term loan the financer will divide the total into 36 equal payments. If you pay the loan off early you could be refunded some interest. However most lenders will keep a percentage as a penalty.
Just remember when getting an auto loan that a simple loan will save you more money.
Joint applicant vs. Co-signer
- Joint applicant: You are applying for the loan along with the other person. In doing so you are putting your name on the title as well, giving you equal responsibilities and privileges to the car.
- Co-signing: If you decide to co-sign an auto loan you are only responsible for making the payments if missed. You will have no rights to the vehicle meaning ownership or being able to make claims.
Know the value before you buy
- Using a value guide such as Kelley Blue Book you can take the information from the car you are interested in and get 3 different price quotes.
1. The first being the MSRP: If the Manufacturers Suggested Retail Price is close to the sticker price then you have entered the information correctly.
2. Invoice price: The amount the car was purchased for by the dealership.
3. Average transaction price: This amount should be between the retail and invoice prices.
Engines with cylinder deactivation
- To save yourself money this allows the cylinders to deactivate during times that you do not need full power. While V6 and V8 engines have all the necessary power needed when accelerating only using 4 cylinders will get you 10% better gas mileage.
Extended Warranties
- This makes the dealer a good profit as it being like an insurance policy instead of an actual warranty. So if your new car already comes with a 60,000-100,000 mile warranty that covers the most expensive parts, like the engine and transmission, the extended warranty will only cover minor issues such as air conditioning and electronics.
Safe seats
- You need to have a seat that can keep your head and body moving at the same speed if struck from behind. Some common vehicles such as the Corolla and Silverado have been proven to not provide the proper support needed from your seat.
Certified used cars
- Most car dealerships offer certified vehicles, which have been tested and proven more reliable by their mechanics. Having lower mileage and less wear to the body can possibly increase the price of the vehicle by up to a couple of thousand dollars.
So when going to purchase a vehicle keep in mind these simple steps and you will save yourself money and end up more satisfied with your vehicle of choice.
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