Monday, May 5, 2014

What to know before walking into the finance office at a dealership!

Financing a new car or a "new to you" car can be an exciting but scary process. You want to get the best deal and who can blame you? You just need to do your homework first and be prepared when you go in, that way when you leave you are happy and not scratching your head asking yourself what happened.

1. Ask yourself how much you can afford to spend a month. Really do the numbers! When you are making a commitment this big you don't want to get in over you head. Lets say you can afford $300 a month and a $1500 down payment.

2. Ask yourself, how long you want to be making payments for. If the car is older you might not want to be paying for it for 4 years if its not going to last that long. If you are planning on having kids in a year or two and would need to switch cars maybe a 24 month term is right for you? Maybe its a brand new car and will fit your needs for years to come, then you could go longer. Figure out what is right for you. Lets say you want to be done in 48 months.

3. Search online and talk to a few people to figure out a estimated loan rate for you. Not to high, not too low. Something that you can base your numbers on and feel confident. Most people know about what their credit should be and usually have a good idea about what rate they can get. Lets say you average a 5% loan rate.

4. Lets do the math! Use an auto loan calculator and work backwards to calculate your purchase price to see what you can afford (click here for a calculator). Put in your numbers and it will spit out a price. In our example our purchase price would be $14,526.88. Now when you walk in you know not to even look at anything higher than a sticker price of $15,000 and hope to negotiate down some.

5. Now it's time to get financing. The finance department can usually get really competitive rates, they do this all day everyday and know the right people to talk to. You've already done your research so you know about what rate to expect. 

Lastly as a side note, when buying a new car you will typically hear something called a rebate. A rebate is just extra money you save if you buy a car the dealership has extra of. Sometime they will even offer 0% financing on cars they have a lot of stock on. Typically its one or the other. Do the math, you might assume 0% will save you more money but sometimes its best to take the rebate.

Think through all your options and go in confident. If you ever have questions give us a call and we would be glad to help you. 940-243-6200.

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