When applying for a new car loan or negotiating with a salesperson for your new car, you want to ensure you've done your homework and prepared ahead of time. There are some things you can do to save hundreds, if not thousands, of dollars on the cost of that loan, but a few simple mistakes oversights can cost you just as much. Note a few those mistakes here so you can be sure to avoid them and walk away with the best loan for your car.
Negotiate the purchase price, not the monthly payment price
If you tell a salesperson the monthly price you can afford for a new car, you may miss out on the opportunity to negotiate the overall purchase price. If you have a lower purchase price, your monthly payment should automatically be lower, but if your salesperson knows you're willing to pay "X" amount each month, they may simply offer to extend your payments over a longer period of time. In turn, you're paying more for the car and more for the life of the loan even though the monthly payments are lower. Always negotiate the price of the car before you negotiate the loan payments so you save the most, and never tell a salesperson what dollar number you're willing to pay every month so you always leave room for additional negotiations.
Do the math ahead of time
Rather than waiting for a salesperson or loan officer to tell you how certain changes in interest rates or terms of a loan will affect your monthly payment and the amount you pay for the life of the loan, do your homework ahead of time. Calculate how much money the loan will cost at a certain interest rate if you pay for four years, then calculate the same cost with half a percentage point lower, and so on. Create a chart with different time frames for loans; consider a four-year loan, a five-year loan, and so on.
When you do some research and planning first, you won't need to rely on the salesperson or loan officer to offer you a better option that will save you money. Instead, you can take the initiative to ask. They might then be willing to lower the interest rate by a percentage point, spread out the loan a certain amount, or otherwise structure it so it saves you the most money overall.Share
24 August 2016
I recently got divorced, and not only did I lose my wife, but I also lost most of the possessions I'd accumulated over the last 3 decades. I needed to take out a personal loan just to buy a new bed because I walked out with nothing but my self respect. It's not easy to start with nothing, but I earn a decent wage and I'll be able to build it all back as long as I am smart about how I structure the loans and financing of my new life. This blog is all about taking out loans to fund a divorce and new, post-divorce life.