These days having a reliable and safe vehicle to drive is more important than ever. With public transport packed to the hilt and often unreliable, many people have learned to rely on their vehicles to get to college or work, pick up the kids, do the shopping and even to perform their jobs. That's why things can get really tough when you find yourself with an unsafe or unreliable car. When it comes to affordable car finance loan companies offer some great deals to suit all budgets and needs.
Whatever type of car and price you are looking at, a loan company should be able to help you by providing low cost finance. Of course, the amount that you will be eligible to borrow for your car will depend upon your income and employment status amongst other things. If you really want to keep costs down when buying a new car, try and go for a basic model - however nice the thought of driving the latest sports model might be, the insurance costs along can end up being financially crippling.
Getting a basic car coupled with finding low cost car finance from a loan company means that you can enjoy the benefits of safer, more reliable driving at a really affordable cost, rather than having to pay a fortune for the privilege of getting an improved car, or worse still, being left to struggle with an old banger that is on its last legs.
In today's changing consumer market, with increasing competition between car dealers and financial institutions, securing reasonable financing is easier than ever. But here, as elsewhere, fortune favors the prepared and gives a special bonus to shoppers who are willing to follow a few tried-and-tested rules.
The first rule is simple. Buy a car that fits your finances. Genevia Fulbright, vice president of Fulbright & Fulbright, CPA, in Durham, N.C., says you should understand your cash flow, and the reason you are buying this car. If it's solely for business, leasing may be an option. Also, you have to be aware of the hidden car costs, like insurance, gas and parking. Make sure all of these are taken into consideration when buying a new car to avoid surprises. A good rule of thumb for car payments is that the monthly total should be no more than 20 percent of your net income.
The next rule is to pre-shop. Use the Internet, use the library, use your neighbors, use competing car salesmen--use every available medium to find out who is offering the lowest financing and the lowest interest rates. Compare rates at banks, credit unions, car dealers. Check the hidden costs. Does this plan penalize you for paying off the loan early?
Experts say the informed buyer, or the buyer who seems to be informed, and who can quote the different rates offered by banks, credit unions and car manufacturers, will almost always get the best deal. A former Chicago banker advises new car buyers to make salesmen and financiers work for them by quoting the rates they have been offered and by asking salespersons to match the rates or top them.
It's also a good idea to obtain a copy of your credit report. This step will make the hunt for financing much easier, experts say. While some specialists say you should have your financing arranged before you arrive at the dealership, others say you should consider the numbers of the dealer's finance officer. Sometimes dealers run special low annual percentage rates for qualified customers (those with good credit who meet income requirements), and also rebates to sweeten the pot, says Alex Elam, a car salesman from Bakersfield, Calif. "You're always wanting to see what the dealer has to offer," Elam says.
On this level, you must make a clear distinction between the sticker price of the car and the real price of the car--the sticker price plus the money you pay to finance your purchase of the car.
This means, among other things, that you must understand the three iron rules of car financing:
• The less you know (about financing, about available interest rates, etc.), the more you generally pay.
• The smaller the downpayment, the higher the total price.
• The longer you finance the car, the more you are going to pay.
It's a law. Thirty-six months cost more than 24 months, and 48 months cost more than 36.
Here, as elsewhere, knowledge is, among other things, money.
Once you understand these iron rules, you can make them work for you by seeking and making deals that will let you keep more of your money.
Mary C. Haynes of Lithonia, Ga., turned to the Internet to get more information about buying a car. The 58-year-old human resources specialist at Georgia Tech said she went to a Web site and punched in the options she wanted.
"Four or five hours later," she says, "a representative called me and said that within 48 hours they would locate a car for me."
And they did, at a much lower price than she would have paid otherwise.
While Haynes' story may not be typical, it illustrates the new dynamics of the changing marketplace.
What hasn't changed in this market is the need for information and planning. Alex Elam, the California car salesmen quoted above, says that the car showroom should be the last, not the first, stop of a serious shopper.
"By the time a customer goes to a dealership," he says, "they're going to a buy a car. You have to understand what you're buying. The key is knowing what you want."
you decide to finance your car, be aware that the financing obtained by the dealer, even if the dealer contacts lenders on your behalf, may not be the best deal you can get. Contact lenders directly. Compare the financing they offer you with the financing the dealer offers you. Because offers vary, shop around for the best deal, comparing the annual percentage rate 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 of the car you negotiate, the annual percentage rate, 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's 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.
Before you sign a contract to purchase or finance the car, consider the terms of the financing and evaluate whether it is affordable.
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's worthwhile. Check your existing policies to avoid duplicating benefits
Most people do not realise that they have capital locked up in their property which could be used for buying that special car of their dreams.
Release the capital tied up in your home with a home owner loan. The loan can be used for any purpose, and is available to anyone who owns their home. Home loans can be used for any purpose such as, new car, home improvements, pay of store card or credit card debt and debt consolidation.
Home owner loans are available for practically any reason. One of the most common types of home owner loans on offer are debt consolidation loans where the objective is to reduce monthly outgoings to a more manageable amount.
Other ways .
New cars are one of the worst purchases that we can make due to the rapid decrease in value, especially over the first three years. When we finance these vehicles, this turns a bad situation even worse. We have now added a couple thousand dollars in interest to the cost of a depreciating item.
Used cars are the answer to avoiding this big hit in depreciation, but many people still finance the used car. Let's take a look at how you can buy used vehicles even when you have very little to start with.
Let's assume you wanted to purchase a 2005 Accord for $20,990 and financed it for 6 years at 5.95%. The payment would be $341.85 per month for a total amount paid over the life of the loan of $24,613.40. That includes $3,623.40 in interest paid.
Since you had decided that you could afford the $341.85 payment to the finance company, we assume that you can afford to pay yourself $341.85 into a savings account.
We round off this savings and do not account for any interest and assume that you save $4,000 each year. We will also assume that you can drive your current jalopy for one more year while you save this money.
January 2006 you now have $4,000 saved and can afford to buy a 1992 Honda Accord.
January 2007 you can sell the 1992 for $1,400, add another $4,000 to it and buy a 1995 Honda Accord.
January 2008 you can sell the 1995 for $2,000, add another $4,000 to it and buy a 1997 Honda Accord.
January 2009 you can sell the 1997 for $2,300, add another $4,000 to it and buy a 1999 Honda Accord.
January 2010 you can sell the 1999 for $2,600, add another $4,000 to it and buy a 2000 Honda Accord.
In January 2011 you have reached the value of used car purchases where selling the 2000 and adding $4,000 to it will not substantially upgrade your car, so you continue to save.
January 2012 you can sell the 2000 for $2,400, add $8,000 (two years of savings) to it and buy a 2006 Honda Accord.
Now we can compare the two decisions. If you had bought the new 2005 you would have a paid off 2005 in 2011 and you would have paid interest ($3,623.40 to be exact) on top of the purchase price. Using our example you could have had a 2006 one year later in 2012 completely paid off and your money made interest for you while in your savings account.
These numbers are all conservative and you could do much better by continuing to save and delay your used car purchases longer than one year. This would be the best thing to do so that you do not keep losing value on selling cars.
For example, if you kept saving and bought a used car every two years you could have bought a 2008 Honda Accord in 2012 completely paid for. When you stretch out your used car purchases while continuing to save, you can purchase much newer vehicles. With this method you can always purchase newer used cars and never pay interest to anyone.
The key to making this work is the disciplined savings. If you have decided that you can make a new car payment, you can put the money in a savings account earmarked for used cars.
Also remember that since you do not have a car payment, if you have a financial problem like a job layoff etc., you will not have to worry about losing your vehicle. Driving paid for used cars is a wise financial practice. It is said that it is the millionaires that purchase and drive used cars. It is those in deep debt that drive new and leased vehicles.
The prices for these vehicles all came from Kelley Blue Book. The purchase prices are just under the KBB retail value and the selling prices are just over the private party value. The values that is used were conservative and you could do much better, especially if you hold onto your vehicles longer while continuing to save.
And some more ..
When more than 17 million new cars, vans, pickups and SUVs are sold in the United States in a typical year -- and you're a college graduate -- huffing it by foot won't cut it anymore.
It's one thing to trudge across campus to class, but quite another trudging to work when you've paid your dues.
As a college graduate heading to your first real-world job, buying your first new vehicle doesn't have to be a pipe dream. In fact, all the major vehicle manufacturers want you to drive their brands and don't mind enticing you to do so. And entice you they will. They'll offer special college graduate financing programs offering benefits like no down payment, cash rebates, affordable interest rates, delayed payments and service support. Surveys show that some 60 percent of firsttime auto buyers remain for life with the brand of the first new car they purchased, so you're in demand. And automakers like young college graduates since they typically don't yet have mortgages or children competing for auto-buying dollars.
According to the National Automobile Dealers Association (NADA), despite the rigid economy the past two years, vehicle sales have been at record levels. More than 17.4 million new vehicles were sold in 2001 and 17.1 million in 2000. About half of all new vehicles sold are light trucks, including sport utility vehicles (SUVs). The average retail selling price for all new vehicles is about $25,000, according to NADA.
Average rates for financing new vehicles in March 2002 was about 7 percent annually.
While your status as a college graduate will open up numerous programs, you still must qualify. Most programs require that you have a job or offer of employment. Usually you get the process started a few months before graduation and you may be eligible up to a year after graduation. If you're a graduate student, no problem. And credit is vital to qualifying. While having no credit history won't disqualify you, adverse credit, such as late payments to department store or credit card accounts, might. Graduates who have established credit should always monitor and understand their credit reports and credit scores, and make sure they are accurate. Credit reports, which are maintained and supplied by credit bureaus, can be bought easily online for nominal fees.
But even before going to a dealership and inquiring about college financing programs on new cars, it always helps to get advance information. Automakers have their own glitzy and well-stocked Web sites, and so do dealerships. Just search on an Internet search engine using the key word: automakers. In addition, information can be found at online independent car-buying sites.
These sites will help you calculate the cost of vehicles, options, financing terms and payments. In addition, they will provide articles, reviews and tips on financing and loans. Just about everything under the sun on autos and financing is a click away.
And don't dismiss online buying and financing, too, especially if you are a minority. An October 2001 study by professors at Yale University and the University of California at Berkeley found that AfricanAmerican and Hispanic car buyers pay about $500 more per average vehicle at dealerships than do whites for identical cars. When buying on the Internet, minorities and whites pay about the same, according to the survey. Additionally, researching Web sites, will offer you information about pricing and current rebates and special offers. During February 2002, automakers were offering rebates on new vehicles that averaged around $1,600 per vehicle, but many of those are reserved for top, credit-worthy customers. Doing sufficient advance work will prepare you to meet the dealer head-on.
