Auto Finance 101: Tips on Auto Financing

Buying a car is the biggest financial purchase you can make beside buying a home. Most people finance their purchase to be able to afford a car. Unfortuately most people also just get an auto loan through the dealer without shopping for auto loans, which isn’t the best way to obtain financing.

Before you walk into a car dealer showroom, you should contact lenders directly. Most major banks if not all offer auto financing for both new car purchases and used car purchases. Some banks also offer auto loans to buy a car directly from an individual.

Arming yourself with current auto finance rates will also give you the ability to better negoiate with car dealers. Most dealers are offering great terms and deals on cars these days so it’s quite possible the dealer can give you a better rate, you might also qualify for a zero percent rate.

Each type of vehicle will also have different insurance premiums so check auto insurance rates for the vehicle you are planning on buying or leasing. You can find auto insurance companies offering auto insurance in your zip code by using MonitorBankRates.com insurance search engine.

Find Auto Insurance Companies in Your Zip Code Here

Create a worksheet to compare auto financing options and auto finance rates each banks offer. Rates are low these days - Pentagon Federal Credit Union is currently offering a rate of 3.99 percent for an auto loan up to 60 months. When comparing auto loans be sure to compare apples to apples, compare the annual percentage rate (APR) and the length of the car loan. Longer term loans will have higher interest rates.

In case you haven’t heard, there is a Federal Government program called the Car Allowance Rebate System (CARS) which will give rebates up to $4,500 for purchasing a new, more fuel efficient vehicle when you trade in a less fuel efficient vehicle.