One cannot do any work without a car these days like commuting to work, shopping, holidaying – all these activities need a car. Buying a car however, is easier said than done. A new car is expensive and a person wishing to buy one has to arrange for a new car loan. So in addition to doing research for selecting a suitable car, the purchaser has to thoroughly research and find a suitable new car loan.
Shopping around for a new car loan will involve some work. This kind of loan can be got from various sources and to get a loan with the best terms, the car buyer needs to study the loan provisions of each.
Car dealers generally tie up with car loan lenders, making it easy for the car buyer to arrange funds. Dealers generally advertise in newspapers and magazines and also distribute pamphlets with details of the loans offered. The buyer can select the dealership which offers the best deal.
Banks offer new car loans, each bank having different loan terms. The prospective car buyer first needs to collect loan information from various banks. He can then negotiate for better terms and select the bank whose new car loan terms are most attractive.
There are many web sites like lendingtree.com which have tied up with various new car loan lenders. Car buyers today, find it very convenient to borrow loans through these sites. From the comfort of his home, a person wishing to take a new car loan can compare rates, loan tenure and other details and select the loan which offers the best terms. All this is done without visiting any place or calling anybody and the task of finding a suitable loan can be completed in a short period of time.
Comparing new car loans offered by various lenders can be quite complicated as it involves comparing each loan attribute.
The following features of a new car loan need to be compared before selecting the most suitable:
A lender generally requires fees to be paid upfront when taking a new car loan. These fees may have a fancy name like ‘loan origination fees’ or maybe simply called processing charges.
The annual percentage rate of the loan is computed by adding the interest amount, all the fees and charges levied by the lender and expressing this total as a percentage of the loan amount. The buyer can then choose the loan with a comparatively low APR .
A new car loan taken for a longer period will result in lower monthly payment. But often, the borrower fails to realize that the total amount he would pay would be very high. He needs to calculate what exactly the loan costs him by taking the loan tenure into consideration.
The car buyer who wishes to borrow a new car loan should inquire with the lender if he would allow loan prepayment and if would need to pay a penalty for the same. Interest rates at the time of taking the loan may be high and the buyer may want to refinance the loan in future. So it would make sense to negotiate with the car loan lender and do away with prepayment penalty charges.
After comparing all these features, the borrower can hone in on a loan which offers the best terms.
It may seem like finding the right new car loan is too much of hard work. But failing to take this little trouble may result in the borrower taking a high interest loan or realizing later that the high prepayment fees make car refinancing unfeasible.