Game Of Loans: 3 Strategies You Should Know When Financing A Vehicle

Posted on: 20 April 2016

 It can be scary contemplating a new vehicle payment when you haven't had one for a while or you're out to finance your first car. Even some veterans of car leasing or installment payments get a little queasy when they think about negotiating a new loan.

The best way to avoid worry or stress over vehicle financing is to do your homework and research potential lenders and vehicles before you visit a showroom. These 3 financing tips will get you started:

You must be firm--not flighty--about the decision to finance

The desire to drive a new car can hit you on a whim, but don't go frolicking around for weeks seeking financing while you test drive every car in town.

The dirty little secret about your credit score is that each time a lender researches your credit history, it can count against your FICO rating. However, auto lender credit checks confined to a single two-week time frame count as one inquiry, so consolidate your loan requests to a 14-day period if you don't want your creditworthiness to suffer.

Check with your own bank first to see if you qualify for reduced interest as a customer, then check with other sources. Have financing arranged before car shopping to get the best deals and fastest decisions on vehicles. Lenders can include:

  • Manufacturers
  • Dealerships
  • Banks
  • Credit Unions
  • Finance Services

Certified used cars are flooding the market

With 3.1 million off-lease vehicles hitting the market now and many more expected in the years to come, certified used car leasing and financing is more common than ever. Manufacturers, leasing agents and finance companies are offering extra incentives to get you to drive these late model off-lease vehicles. They want to avoid a glut of used cars on their lots, so they're also offering extra warranty and service packages.

Most off-lease vehicles were subject to mileage limits and regular maintenance when new, so you can find well-cared-for, low-mileage models with lower payments than brand new versions. Just be aware of the extra interest rates charged when financing a used car versus a new one, and choose the newest used car you can live with to offer less risk to your lender.

Terms will generally be 36 months for a used car loan or lease, although some banks and lending institutions will take your credit history, income and other factors into account when determining the length and rate of your pre-owned car loan.

It doesn't always pay to say no

Some dealer or finance company services can be rolled into your auto installment loan to give you greater protection. While this additional coverage will increase the amount of your loan payment per month and the cost of your vehicle over time, in many cases the extra expense can be justified. Don't always listen to people who tell you to go for the cheapest options. Evaluate services to determine the likelihood that you'll actually need them before deciding whether or not to invest in a given service.

Services such as prepaid scheduled maintenance will extend the life of the vehicle, while tire and wheel replacement service, key-replacement protection and extended drivetrain warranties may lower the financial hit of replacing parts and repairing an older car.

Roadside assistance and other services can be lifesavers if you travel or use your vehicle for business, but always check with your auto insurer, dealership, car care providers and other lenders to compare prices on these extra prepaid services.


how to choose a quality car

Having worked as a mechanic for about twenty years, I have learned a lot about what cars are better than others. This blog was created to help provide you with the information that you need to know to buy a car that will run well without spending too much in repairs over the first few years. I will show you all about finding the right car, how to know that the car that you are buying is in good condition and what you can do if the car that you purchase isn't quite what you had hoped that it would be.