Important Car finance facts and info for dummies and new car owners.

Doing something for the first time is never easy. Buying a car and owning a car for the first time is no walk in the woods. An especially delicate aspect of buying a car is getting the finance for it. If you don’t understand the basic features and driving forces of the car finance you are likely to get a bad deal.

Just like driving a bicycle for the first time requires training, practice and an understanding of how wheels, handlebars, brakes, centre of gravity, movement of the pedals all interact together, understanding car finance also requires some training and understanding of basic facts. But don’t worry, just like riding a byke becomes second nature, something really easy that becomes a staple in your list of skills, understanding car finance will become a basic skill in your repertouire.

Let’s get to business and get started with our important facts:

1) Car finance matters. For many of us car finance is an afterthought after we have chosen the car and test driven it. Mistake. Having car finance pre-arranged before your choose a car can save you a lot  of money and provide you with an extra leverage point with the car dealer. Go to your bank, give them your current situation and find out how much they are willing to lend you and with what conditions. Take these figures and ask for quotes to at least five more banks or finance companies.

2) Beware of car dealer finance. Car dealers, like you and me, are working for a profit, for a commission. If they don’t sell they don’t eat. What many people don’t know is that car dealers often make more money from the finance than the car sale. This is because customers don’t always read the small print or understand what makes a good car loan.

3) Car dealer car loans. Car loans from car dealers are not necessarily bad but one must understand what they actually are. Most car loans provided by car dealers are not a typical loan where a bank gives you money, you use that money as you wish and then have to pay back the cash. With car dealer loans the car is the loan and it is not yours until you pay the last installment. If you stop paying the loan you lose the car. Because of this fact, lenders feel a little safer with these car loans and sometimes offer better interest rates.

4) Go online for better deals. Car finance is a numbers game. The more quotes and applications you file the more chances you have of getting a decent deal. Don’t be shy, don’t accept loans just because you don’t like to say no. Be ruthless when it comes to your car loan. There are no friends in war, love and car loan finance.

How to Make the most of the car finance stimulus packages?

With the Economy hitting record lows and Governments doing all they can to turn the tide and seemingly not getting very far, is it the time to invest in a new car. The surprising answer is that it might never have been a better time for you to buy the new car of your dreams. Why do we say that? The World as a whole is scared to the marrow of the ominous slowing down of the economy, every government that can afford it has put forward all possible measures to jump start the economy and get people spending and fast. To illustrate, just in the United States 2.3 billion dollars have been injected into the economy in tax cuts to encourage the buying of new cars and trucks. How can you make the most of these and other stimulus packages?

The main answer is education. By educating ourselves on auto loans and the current economy we can make the most of a bad situation and maybe even profit from the tax breaks and reduced interest rates.

1) Understand your credit report and history. Whether your credit report is good or bad you should have a good understanding about how it looks to any potential lender. Ask any of the main credit report companies and see where you could improve your rating. Make sure your outstanding debt is not high, that you have no pending monthly payments, minimize hard inquiries to your credit and control your credit card spending and management.

2) Evaluate your financial situation and act upon it. Understanding where you are financially is as important knowing where you want to go. Just as a navigator trying to reach a destination needs good information on both his location and the location of the destination, we must understand what we want and what we have in order to benefit from having a working knowledge of your credit report.

3) Shop around. Do not go for the best deal just for the sake of it. Research the reasons and motivations to sell and find out how you can adapt to the situation. Find out the interest rate of the place you are buying the car from and make sure you include the cost of setting the house up. This is an important part of comparing prices, we must be sure we are comparing like with like in order to use your understanding to the full.

These steps are easy to follow, takes no rocket scientist. However we could be wasting billions if we don’t do our best to get a good deal and make the most of the stimulus packages.

Happy shopping!