Today we will be discussing some things you may not know about auto loans. There are certain procedures that go on in the auto industry that lead consumers to believe some false information about loans of this type that everyone should know.
1) It is not necessary to arrange auto loans through the car dealership. A typical vehicle purchase goes as follows. You go into the dealership and start to look at cars, at some point a car salesman will approach you and ask you if they can help you. They'll then proceed to try to sell you one car or another, if you agree to get a certain vehicle they'll immediately begin discussing payments with you.
Well hold on a second, do I need to arrange financing with the dealer? After all, I'm here to buy a car not get a loan. You'll find that if you make arrangements to get pre-approved by the lender of your choice BEFORE going into the dealership you'll accomplish two things. First, you'll know you shopped around and got the best rate, not just the best rate the car dealer gave you. Second, you'll have more bargaining power, you won't be arguing over how to get lower payments, but rather how to pay a lower total price.
2) Cars that have auto loans associated with them are required to have full coverage insurance. This type of insurance means that if you are in an accident and there is damage done to your vehicle than your company will pay for those damages (minus the deductible and any money owed by the other party).
Why are you required to have this type of insurance? The reason is that you don't truly own the car until it is paid off. Since the bank (or other lender) still owns the car that you are slowly buying in payments, they want to protect their property and therefore require full coverage insurance.
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