If you choose to finance a new car, keep in mind that the financing offered by the dealer may not be the best deal you can find. It is recommended that you contact lenders directly for information on the loans they’re willing to offer you. Compare the financing offered by the dealer and lenders because offers will vary. Shop around for financing and pay most attention to the annual percentage rate (APR) and the length of the loan offered. When negotiating financing, don’t focus only on the monthly payment. The APR, length of the loan, and price of the car all determine the total amount you’ll pay. Of course, with a bad credit auto loan, you can go in with cash and negotiate a much better deal.
Sometimes, dealers offer low financing rates for specific models of cars, but are less willing to negotiate on the price. Pay attention to the requirements for the special rates. Many times, you are required to make a larger down payment. It is sometimes more affordable to go with a car that is lower in price but has higher financing charges and a smaller down payment.
Prior to signing the contract to purchase or finance the car, carefully look over the terms and conditions. Make sure all blanks have been filled in and that both you and the dealer have signed. Be sure to have a copy before driving off the lot.
Some dealers and lenders may insist you purchase credit insurance to protect the loan in the event that you die or become disabled. Consider the cost and whether the coverage is something you need. You should also view your existing policies to prevent duplicating your benefits. Credit insurance is not required by Federal law. If the dealer is requiring you to purchase credit insurance for financing, it must be included in the price of credit. Meaning, it must be reflected in the APR. You may also check with your state Attorney General, Insurance Commissioner, or consumer protection agency for more information on credit insurance requirements.