subject: Auto Loans Are Not Alike [print this page] If you are studying to purchase a new car and applying for auto loans, you may be enticed to accept the first auto loan approval that you applied for. The convenience and easiness may cost you in the end, especially if you did not do your research in advance. All auto loans are not alike and if you get into a bad one, you will really pay the price.
First, detect the interest rate as the first deciding factor. If you currently have a car that has been financed for more than a year or two, your new auto loan should be at least two to three points lower than the old one, based upon on your credit. Interest rates have fallen with the economy; therefore, getting a good rate now is possible.
Make sure there is no pre-payment penalty that will actually penalize you if you attempt to pay the loan off early. Paying a loan early is always a good idea, even if you are just paying a few extra dollars each month. A valuable thing to remember is that you can save a lot of money over the length of the loan if you do this, but not if you are punished for doing so. So, keep in mind that before you sign the final loan documentation, make sure that you can pay the loan off early without having to pay a fee.
Also keep in mind that some auto loans may increase your interest rate later down the road as a penalty for late payments, or other negative behavior. One small mistake on your part should not cost you for the life of the loan. Always be careful when signing an auto loan and do your study ahead of time in order to be prepared the next time you are in the market to buy a car.
If you take into considerations the above points the next time you are buying a car and applying for an auto loan, you will be prepared to deal with the car buying process more efficiently and effectively. Go into the process like a cash buyer and feel empowered in that you have the flexibility and options to decide the car that you want to buy on your own terms.
by: Bruce Jackson
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