Now that you’ve chosen a car that you want, it’s time to pay for it. Here’s how to avoid getting swindled at a car dealership and get the best bang for your buck in terms of a new whip.
1. Don’t fall for a lower monthly payment. If you’re paying a lower monthly payment, you may be paying more in interest, which can lead you to pay $1,000+ more than the base price of the car.
2. Avoid long-term loans if you can. Many lenders now offer eight-year loans for cars. The problem here is that cars depreciate in value from the moment they leave the dealership’s lot, so you may very possibly end up paying thousands more than the car is actually worth by the time you’re done.
3. Get your FICO score in check. Lenders will use your credit score as one of their determinants for your interest rate.
4. Shop around. Just like you probably wouldn’t get married after a first date, don’t settle for the first loan offer you get. Apply for different car loans, both at the dealership, at banks, and online, and see what offers you get, then opt for the best for you.
5. Apply for you car loans at the same time. The caveat for applying to multiple car loans is that you have to apply for them around the same time, otherwise your credit score can take a hit, because it looks like you need all of those loans. You dig?
6. Show up to the dealership with financing in hand. The dealership may offer you better financing if they know you know your stuff. If you don’t, they’ll try to hook you in with a low price, then try to make up for it with high interest rates and shady loan terms. If they can’t match or improve the interest rate or terms, focus on the price.
7. Be ready to walk away. It gives you all the power!