Auto Loan - What is the Best Option For You, and How to Get It

Auto loans come in all shapes and sizes. It is important for you to know what is best for you and how to get it. A good dealer will be able to help you get the kind of loan you require, but remember that the dealer is not the financier. There are questions you have to ask.

What is the duration of the auto loan you are looking for? The normal duration is up to 60 months, but longer loan periods are available. Just remember that the longer the loan, the lower the monthly installment you will be paying. But the overall interest will be higher which means the final cost of the car will be more. It is always better to take an auto loan for the shortest period you can afford and save on the interest.

Always check on the final cost of ownership - down payment + installments + interest. Paying a few hundred dollars a month as installments for a new car is fine, but what about finding out that the amount you will be paying in interest against the auto loan? Do not get carried away by the monthly payment, look at the over all picture.

If you have credit rating problems, the interest charged on your auto loan will be higher than otherwise. Again, try and save by paying off the loan as quickly as you can.

Making as large a down payment as possible will reduce your monthly auto loan installment which will help you go in for a shorter loan term.

Trade in your old car to cover the as much of the down payment as possible. If the value of your old car is greater than the down payment amount, do not be tempted to pocket the extra cash. It is always better, in this case, to increase the amount of the down payment and reduce the duration of the auto loan or the monthly installments.

Deciding on the auto loan duration is not only about the money you save on interest. It also depends on how long you plan to keep the car. The rates of depreciation for different models vary. If you are planning to replace your car in 3 years and the model you have has a high depreciation rate, you will not get much of a resale price for it. However, if you are planning on keeping your car for a long time, the rate of depreciation is not so important. This is an important issue that many people overlook.

You may be asked to provide credit insurance, which the dealer will be able to arrange for you. But before taking this route, check if any of you existing insurance covers this. If so, compare the rates before deciding how to proceed.

Always get in writing the amount you will have to pay each month. Some auto loan plans have very low initial installments which are compensated by larger payments in later months. You must be sure of your auto loan liability for each month of the loan period.

German Star Motors first opened its doors in the fall of 1997, determined to provide the most exceptional customer experience within the Greater Toronto Area. Since that day, we have grown and excelled, yet we have remained committed to the cause of providing every person entering our dealership with the most enjoyable experience possible.

http://www.germanstarmotors.ca

Source: http://www.goarticles.com/cgi-bin/showa.cgi?C=1109457