Comparing Auto Loans
Richard BarringtonLoanBiz Columnist
Comparing auto loans
can save car buyers as much money as shopping around for a car. It's not just
that auto loan interest rates can vary, but there are other expenses, terms,
and conditions which can affect the overall cost. A car payment calculator can
help car buyers sort out the differences as long as they know what to look for.
There's a thrill of excitement that goes along with buying a car, a rush that
takes people back to the first time they ever slipped behind the wheel. There's
no such buzz associated with shopping for auto loans, but perhaps there is a
trade-off: a person who does his or her homework on an auto loan may very well
be able to afford a more enjoyable car.
Your Friendly
Neighborhood Dealer
For most people, shopping for an auto loan begins and ends
at the same place: the dealer where they purchase the car. There is a blind
assumption that this dealer will magically provide the most competitive auto
loan interest rate and terms, though in reality it is simply the convenience
that causes many people to get their auto loans through their car dealers. It
makes sense to consider dealer financing, but only in comparison with other
lenders.
Some dealers get incentives when buyers finance through
them, so they might offer an extra discount on the price of the car in return. As
tempting as this discount might be, a buyer won't really know what it is worth
till the dealer's loan terms are compared with those available from other
lenders. Shopping around may reveal lower auto loan interest rates. If so, the
buyer should run a comparison with a car payment calculator to see if the
discount on the car is worth paying a higher interest rate.
Speaking of auto loan interest rates, many dealers lure
buyers in with financing deals such as "no interest till next
year." These can represent valuable
savings, but buyers should beware that there can be a difference between the
phrase "no interest till next year" and "pay no interest till next year." The first is a good deal; the second may
actually be more expensive than regular interest payments.
The Fine Print
Using a car payment calculator can also help buyers sort out
differences buried in the fine print, such as fees and insurance. Factoring
these in alongside interest rate differentials will reveal whether the lowest
rate is really as low as it seems. Again, no one said this would be fun, but
saving money might turn out to be a thrill of its own.
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.
