Financing Your New Car.
If you decide to finance your car, be aware that the financing
obtained by the dealer, even if the dealer contacts lenders on
your behalf, may not be the best deal you can get. Contact
lenders directly. Compare the financing they offer you with the
financing the dealer offers you. Because offers vary, shop
around for the best deal, comparing the annual percentage rate
(APR) and the length of the loan. When negotiating to finance a
car, be wary of focusing only on the monthly payment. The total
amount you will pay depends on the price of the car you
negotiate, the APR, and the length of the loan.
Sometimes, dealers offer very low financing rates for specific
cars or models, but may not be willing to negotiate on the price
of these cars. To qualify for the special rates, you may be
required to make a large down payment. With these conditions,
you may find that it’s sometimes more affordable to pay higher
financing charges on a car that is lower in price or to buy a
car that requires a smaller down payment.
Before you sign a contract to purchase or finance the car,
consider the terms of the financing and evaluate whether it is
affordable. Before you drive off the lot, be sure to have a copy
of the contract that both you and the dealer have signed and be
sure that all blanks are filled in.
Some dealers and lenders may ask you to buy credit insurance to
pay off your loan if you should die or become disabled. Before
you buy credit insurance, consider the cost, and whether it’s
worthwhile. Check your existing policies to avoid duplicating
benefits. Credit insurance is not required by federal law. If
your dealer requires you to buy credit insurance for car
financing, it must be included in the cost of credit. That is,
it must be reflected in the APR. Your state Attorney General
also may have requirements about credit insurance. Check with
your state Insurance Commissioner or state consumer protection
agency.
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