Typical New Car Finance Options

A smart consumer will explore all the financing options before going to the dealer to purchase a new car. One should not look dumbfounded when the sales representative asks ? ?How do you plan to finance the car?? It would be a big blunder if one is not ready with an answer. The representative will take the buyer for a ride and coax into getting highly expensive finance from the dealer itself. Here are some new car buying tips that will help you are wary of the smooth talk of the sales people, and become a smart consumer.

Dealership finance is a very convenient method of getting finance for new car. One can be a car owner within minutes and paperwork can be dealt with even on weekends. However, the convenience comes with a huge price tag. Dealers charge very high interest rates. An excellent credit report and some smart negotiations may make the deal a fruitful one. Low Interest Rate New car loan vary from dealer to dealer. However, banks, credit unions, and financial institutions typically provide cheaper rates as compared to dealers. Extensive research is important in any case. Talk to various lenders, and compare their rates and terms of repayment. Usually, auto loans are granted for a period of up to 8 years. Interest rates vary between 6 to 10 percent.

There are three ways to financing for new car.

1.Buy the car - In this case one has to get financing from the dealer or from some other external source.

2.Lease the car ? The car dealer will arrange finance for the buyer. Based on the buyer?s credit availability and requested duration of leas, banks will be approached. Most auto lease contacts permit 12,000 miles a year. One can apply for more ore miles, which will attract higher payments.

3. Pay lump sum amount ? A consumer can directly pay the dealer the total price of the car by cash or check. Negotiations with the dealer become very straightforward and hidden costs can be avoided. However, most consumers do not have such liquid cash in hand. Pre-approved loans are an alternative in this case.

Buying new car with bad credit can be an expensive affair. Car dealers as well as banks charge extremely high interests for bad credit auto loans. Rates can go as high as 16 percent. So, it is advisable to do some extensive research to find the right lenders.