How to Shop for a Car Loan
Shopping for a car loan requires time spent researching various options. Let’s take a look at a few of these options.
Let’s assume you are purchasing a new car from a dealership. Odds are before you leave the lot with your new car, you will be escorted into the financial office where you may be asked to sign up with a specific insurance company. While this may save time and, in some instances money, you may wish to shop around and ascertain if there are more affordable rates out there.
Shopping around for the most affordable rate is a good idea. Where do you begin? Call or visit your bank. Ask about their car loans and interest rates. If you have obtained other loans from your bank, they are more inclined to offer you the best rate.
Also, check other banks in your area. They may offer slightly lower rates than your bank and perhaps you can use this lower rate as an incentive to your own bank to work with you.
Another option is to check with finance companies. Keep in mind, however, that their interest rates may be higher due to the fact that they work independently. That is, they borrow money at lower rates and then hike it up to consumers.
Credit unions are another option you can check. If you are a member, you can enjoy reduced rates on loans.
Online websites also offer a wide range of loans and interest rates. However, ensure that the company is legitimate, has a telephone number and address on its website, and is an approved licensed entity. It should be noted that if you do decide to use online websites, you may be inundated with emails and phone calls, particularly if the information you provide is given out to third parties.
Finally, you may wish to consider a home equity loan. There are two benefits using this option. One; the interest rate may be lower, and two; you can deduct the interest on your income tax. Here too, there is a risk – if the mortgage payments cannot be made, the home may be placed in jeopardy. However, with a car loan, the most you can lose is the car.