How To Get The Best Deal In Auto Financing
Auto loans can be acquired from many sources. Of course, your credit rating can help or hurt your ability to get the best deal possible, but other factors affect auto financing as well. These include:
- Income and current debts.
Your income will be the major factor in determining whether you can get a car loan, as well as how much car you can afford. However, the level of your current debt will also be considered. Your debt-to-income ratio is configured by the amount you owe on all other debts measured against your income. If the ratio of debt to income is high, you may be limited in the amount you can borrow for a vehicle, and may be charged a higher interest rate.
If you belong to a credit union and don't have any delinquencies, they may be your best bet for a lower interest rate if you have high balances on other credit accounts. If you don't already belong, many municipal credit unions will accept new members with few qualifications. You may only need to open a savings account with a modest balance.
- Model year of vehicle
If you intend to purchase a new car, you should wait until late August or early September when the vehicles for the next model year reach the dealerships. Many manufacturers will offer free financing or cash rebates in order to move existing year models off dealership lots.
- Current auto buying trends
Fuel prices often affect buying trends, with sales of larger vehicles lagging when gas prices rise, and compact car sales falling when gas prices drop. If possible, wait until the price of fuel rises or falls sharply, depending on the vehicle you need. You will usually get a great deal on price and financing for the vehicle types that are not selling well.
- Time of the month and year
Auto sales mangers and salespersons need to make their monthly and yearly sales quotas, so they will be more likely to offer a better price for a vehicle at those times. End of year financing deals are also offered by many dealerships and manufacturers.
- Poor credit
If your credit is less than stellar, you can still get auto financing, but you may need to provide a higher down payment and pay a higher interest rate. It will be easier to try to purchase a vehicle that is not in great demand, or an older vehicle. If you can get an auto loan, always pay on time. You will build good credit that may enable you to refinance at a lower rate at a later date, or at least make your next auto financing experience easier.