You should know the car-sales lingo and the ins and outs of negotiating with an experienced car salesman, if you already have an understanding of how buying a car works. Let’s say you’ve fought long and hard enough for the best deal and finally agreed to a price that you are happy with – you think it’s time for you to breathe a sigh of relief? Well, not exactly.
Didn’t you know that the car finance person is working on commission if you finance a car through the dealership? That means, although they will never tell you this, the financing deal you get is still up in the air. What the car dealership makes the most money out of are those things that get added on in the final stages of closing the deal (things like extended warranties, alarm systems, undercoating, etc.) It’s the job of the finance-office person to upsell you on these things AFTER you’ve agreed to a particular price for the car with the salesman.
Let us cover the choices that you have for car finance, what determines that interest rate that you will get and if you are really getting the best deal, how you determine it, along with some scams that you need to be aware of. Whenever you go out shopping for cars, figure out things such as whether to take the rebate or the zero percent interest deal.
For the majority of people today, paying cash when buying a brand new car just isn’t practically possible. And even if it is, in buying a new vehicle, you might not want to jeopardize your savings. This could only mean that you would be leasing a car, or purchasing it through car finance. If you are indeed buying the car, then, you’re probably financing it through the dealership, bank or credit union, online financial institute or maybe even a family member or relative of yours.
Although it is good for plenty of situations, leasing is a whole different story and we will focus solely on car finance. You need to do some research and decide on how to get the best financing deal if you really know that you want to finance your car instead of paying for it in cash.
How do you know if paying cash for the car is the right thing to do, especially, if you do have the money for it and are really considering doing it? Here are some situations where paying cash really should be your best interest:
- If you could pay more interest through financing that amount of money than you could earn if you invested it in stocks or business or just kept it in a savings account.
- If you would have to pay high interest to finance the car and if you don’t have very good credit rating.
- If you do not have enough cash on hand and you have a lot of debt already and you also don’t want to damage further your credit rating.
But if you’re just like most people, you are probably going to need to get car finance. Just be careful on looking for the right dealership and financing institute. Make sure that you are aware of their financial resources; financial discounts and if they have the best financing rates.
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