Buying a new car is a big investment. It requires a pretty sum of money. That is exactly the reason why some individuals seek the services of car financing. However there are loan providers that take advantage of the situation. Some dealer loans could get so high that you actually pay so much as compared if you will get the financing from other source. So it would be better if you are well guided with the current trends in car loans. This article will provide you some strategies that you can employ in getting a more appropriate car financing deal.

First be informed that most of the dealer loans add up about a percentage point of $2.47 from the principal amount of the car loan. Giving you an average of $714 added to the original amount of the car. And a remarkable $25.8 is estimated as the overall addition on the car loan amount for the entire course of the financing. That can be huge especially if you are on a tight budget. This information has been generated on a research conducted by the Center for Responsible Lending on brand new as well as second hand cars of 2009. These car data where obtained from 25 car financing companies. All in all there are 1.7 million accounts considered to come up with the above mentioned statistics of car loan rates.

This particular study also found out that the biggest add on loan rates were given to the used car loans. The mark up on this type of vehicle can get as high as 2.91 percentage points. This can get you a big add up on the principal amount of you car loan. For brand new car financing the loan rate interest is lower at 1.01 percentage points. The lenders credit status also affects the rate of loan interest. Individuals with bad credit standing are most likely to receive a higher add on interest rate on their car loan as compared to the individuals with good credit situation. If the principal amount of your loan is small the general tendency is a higher loan rates in contrast to loans that involves bigger sum of money. And if you chose to have a loan that last for an extended period of time you also get a higher interest rate. The study was also able to establish that lenders are trying to impose the lowest cap rate possible on their car loans so that they can sell the car on the highest amount possible. The good part is loan dealers usually do not enforce this cap on individuals with problems paying their debt.

If you are borrower in an auto financing company it is almost certainly that you no longer check how much the lender’s interest rate can add to the original car price loan. So you are not aware that you are paying far bigger than you should be. Here are the things that you should do to avoid paying high loan rates.

The most important thing to do before you enter into any car financing deal is to have a full survey of the loan rates the different auto financing company offers. Note each and every detail you have obtained from this survey then make a comparison. Make sure you know the average current auto loan rates. This will definitely help you in making a wise decision as to the company where you will place your loan. For a start you can look into the local banks in your place, the credit unions and the online financing company Capital One. These companies are in all probability give their clients a fair deal.

To keep away from the so called yo-yo financing avoid getting car loans on the car dealer himself. That illegal act is concerned with a change in the previously agreed upon loan rate into a much higher one. And you are left with only two choices, to concur with the higher rate or give back the vehicle. You can never be too careful before “signing on the bottom line” especially for big ticket items such as automobiles, cars & trucks. Whether it is even new or used purchasing an automobile for most consumers is the second biggest set of purchases that they will make in their entire lives. Auto salespeople will always be nice before you make the buy – yet after the deal is over and the cash or auto financing has passed – watch out – it is a whole different ball game.

Author Bio: Frances T. Russel
Edmonton Alberta  Used Car
Dealers
Surrey BC Auto Dealers
Surrey British Columbia Truck Car Auto
Dealerships
 

Category: Automotive
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