Tips for Securing a Car Loan

Owning a car is something that many people dream of. However, many simply do not have the money needed to buy one. There is a way for this dream to become a reality. Getting a car loan has allowed millions of people the ability to buy a car and slowly pay for it in monthly installments. There is obviously interest that will also need to be paid.

You might be seriously thinking about buying a car at some point in the near future. If this is the case, you need to explore all of your options where car loans are concerned. You would be wise to educate yourself. This will help to ensure that you get the best car loan at the lowest possible interest rate. Here are some tips that will be very useful when it comes to buying a car with a loan.

Get a copy of your credit report.

You need to take a look at your credit report before you start applying for car loans. You are legally entitled to one free credit report each year from the major credit bureaus.

It is important to keep tabs on what your credit report says. This is because mistakes could be listed on your credit report that could have a negative impact on your credit score. This is something that is more common than most people believe it to be. You need to report any mistakes you find immediately to the credit bureau that issued the report. Make sure they remove the erroneous information and provide you with an updated report and credit score.

You need to be sure that you have the highest credit score possible so that you give yourself the best chance of your car loan being approved.

Talk to people you know and find out where they received their car loans.

Your next step should be to consult with all of your friends and family members. Talking to these people might give you some good ideas about where you should apply for auto loans. Find out how much interest all of these people are paying on their loans.  What made them choose that particular lender?

You should get the opinions of as many people as possible. You can learn from the mistakes of these people. Acquiring knowledge from these people will make your own quest to secure a car loan go much more smoothly.

Make the term of your loan as short as possible.

There are many people who like the idea of stretching out the term of their car loan. This gives them a very long time to pay off the loan. Their monthly payments are also smaller by doing this. However, the major drawback to doing this is the fact that you will end up paying considerably more interest over the course of the loan. This is why you need to shorten the term of your loan as much as you can while still being able to afford the monthly payments.

This will save you quite a bit of money in the long run.

Go to different lenders and compare the interest rates they offer you.

It is very important for you to understand that you will not get the same interest rate from every lender. In fact, you will be amazed to discover how different their interest rates can be.

You have absolutely nothing to lose by taking some time and contacting as many lenders as you can possibly find in your area. This will give you the best chance of finding a suitable rate that you can afford. It is especially important for people with low credit scores to do this. Lenders will typically give a higher interest rate to people with a low credit score.

Find out what interest rates online lenders will offer you.

Some people who are not Internet savvy may only go to their local credit unions and banks when they are searching for the ideal car loan. However, there are a wide variety of online lenders that you can also try. You can simply fill out their application. They will tell you the interest rate they will give to you in the event you decide to take out a loan from them. You can then use this interest rate to negotiate a better rate with your local credit unions and banks.

You need to use every advantage available to you when you are trying to get the lowest possible interest rate. You need to always look out for your own best interests.

Try to make at least a 20 percent down payment.

Your goal when taking out a loan should always be to pay as little interest as possible. Therefore, you should save up enough money before you apply for a car loan so you will be able to pay at least 20 percent of it right away. Pay more than this amount if you can afford it. You don’t want to get into a situation where the interest makes your loan cost more money than the value of the car.

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Why Are So Many Consumers Hypocrites About Fuel Economy?

I always take polls with a grain of salt.  Still, this one astounded me.   Consumerist reported that 87% of Americans surveyed think that automakers should do more to improve fuel economy.  The first thought that crossed through my mind when I read this was “Hypocrites!”

All For Increased Fuel Economy

Don’t get me wrong.  I’m all for better fuel economy.  I’ve been driving for about 25 years now (Yikes!) and the advancements in fuel technology have been remarkable. I know that even before that things came a long way from the fuel guzzlers of the past.

Image via Morguefile courtesy of gracey

I think many of the technologies are great.  Automakers build better engines.  They use lighter materials.  They make things run more efficiently.  Aerodynamics are improved.  It all works together so that vehicles use less fuel.

It’s pretty cool.  And I have no doubt that the innovations will continue.

So why am I shaking my head?  Read on.

How Some Consumers Are Hypocrites

As I mentioned above, I’ve been driving for 25 years.  With the exception of one period when we hit gas prices around $3-$4 per gallon, Americans keep drifting more toward SUVs and trucks, and away from cars.

Chevrolet really improved the Malibu and yet sales continue to drop year over year.  Ford never even considered building their latest Focus here, instead deciding between Mexico and China for production.

The bottom line, people keep gravitating away from cars and into bigger vehicles.  Ones that, of course, get a lot worse fuel economy.

It makes me wonder, how many people that responded to this survey have moved up to a bigger SUV or truck recently?  Guessing by the numbers, it would seem an awful lot.  I think that’s somewhat hypocritical.

These people are basically putting 100% of the responsibility on the automakers, and none on the consumer.

That’s just a bit head shaking to me.

Consumers Have Responsibility, Don’t They?

It seems that if consumers continue to choose bigger and bigger automobiles instead of smaller, more fuel efficient choices, that they hold some responsibility here.  The average fuel economy would be a lot higher if even 10% of the people that chose SUVs chose a passenger car instead.  It seems to me that right there would go a long way toward improving fuel economy.

I get that a lot of people have legitimate reasons for moving to a bigger vehicle.  I’m not saying there isn’t a need.  Heck, I’m one of them as I got a bigger truck since we tow our RV.  But, I knew going in that I was decreasing my personal fuel economy.  And, if I’d been one of those surveyed, I’d have definitely not put 100% of the responsibility at the feet of the automakers.

A little self awareness goes a long way, don’t you think?

Readers, what do you think about the survey results?  Do you agree that some people are a bit hypocritical or is there an angle I’m missing?  Let me know what you think in the comments below.  Thanks for reading.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

We Leased A Brand New Pickup Truck – Here’s Why

I’ve been doing this blog for years and I read a lot of other related personal finance blogs.  I love it.  One of the common themes that you’ll see among the personal finance blogging community is to buy a car, whether it new or used, and then keep it for a long time.  This is great advice and advice we lived by for a long time.  But not anymore.  See, we leased a new pickup truck.

Have I gone off the rails?  Nope, I’m still of sound mind.  Am I going to be shunned by my fellow bloggers? Man, I hope not!  So, why did we do it, then?  Well, because the numbers made sense.

Here’s some of the factors that went into our decision to lease a new truck.

We’d been tossing around the idea of something different

We had a 2007 Buick Rainier that was our family car and the tow vehicle to our travel trailer.  Although it had only 94,000 miles, the age and declining value and wanting something more reliable had given us thought to getting something more current.

The transmission problem happened

Last month I talked about how we had a rather expensive fix to the car, to the tune of $600 for replacing a cracked transmission cooling line.  We dodged a bullet as the damage could have impacted the transmission itself, which would have cost an additional $2,000 at the very least.  That’s nearly 40% of the Kelley Blue Book value of the car, and as the risk factor (in my mind) went up, the overall risk crossed a threshold that I just don’t feel comfortable with.

We didn’t feel as comfortable towing

If I had a buck for every time someone came up to me, surprised mb-money201308that we towed a 23′ trailer with the Rainier, I’d have a good chunk of change.  Each time I explained that the Rainier had the towing package and that we were well under the threshold.  Still, it was obvious that it was not designed with towing as the primary function.  With towing a couple of thousand miles over the course of a year, we just felt it was putting too much stress on the engine and transmission as the vehicle got older.  We had no problem when it was just running solo, but for towing, it was losing our confidence.

We wanted a GM

Our family runs fiercely loyal to GM products as both sides of the family have current and past ties to GM, so this is sort of a’must have’ for us.

We wanted something equal or greater for towing purposes

At the very least we wanted something that would tow what the Buick did and possibly more as we wanted to make sure to keep our options open as our trailer ages as well.  GM no longer manufactures a mid-size SUV that has the same towing capacity, so it was either a full size SUV or a pickup truck.  The full size SUVs were just way too much for us and any potential number crunching made it out of our league.

Residuals on trucks are really high (and they hold their value)

Our first option was to look at something used.  I actually talked to someone who specializes in finding used vehicles and he said that the market for trucks is next to impossible.  Anything decent gets nabbed up quickly and often goes for above ask.  On a few different used trucks I found, we’d be paying $5-10k down and paying about $350 per month.  For five years.  On something that was at least 3 years old and had 30-50k mileage.

Residuals on trucks are really high (so we leased a new pickup)

Wait a minute, wasn’t that my last bullet point.  Yes!  But because residuals are high, the lease payments are lower on new trucks.

Ultra low mileage works for us

I’m driving the pickup and between my everyday mileage and the towing, we’re well below even the 10,000 miles which gives us the best monthly rate.

We get ALL of the rebates and employee discounts

On a lease, you’re paying the difference between the current price and the expected residual value.   There were some really good rebates, plus we got employee pricing (thanks to our family member situation), and the great thing about it is that we get the full amount of those discounts, even though we’re only paying a portion of the value.  In simplistic terms, say you buy something with a sticker price of $30,000 and the discount is 10%.  If you bought it, you’d get $3,000 off and owe $27,000.  Now, say with a lease the expected residual value is $20,000.  With regular pricing, you would owe $10,000 in lease payments, but with employee discount, you’re paying based on the $27,000.  In other words, you get the same $3,000 discount but it goes quite a bit further against a lease versus a buy.  Much bigger bang for the buck.

We’re fully covered for insurance

One of the turn-offs I had for a lease was that in many cases, if you’re in an accident and the car is totaled, your insurance will pay out what they feel is the value, but if you owe more than that, you’re responsible for the difference.  With our lease arrangement, the leasing company provides that gap coverage as an item in the lease.

We calculated the off-seting costs

If we purchased something, whether it be new or used, we’d bear the cost of the depreciation.  Even if we kept the Buick, it would likely depreciate by a couple thousand more dollars over the next three years.  Additionally, anything used would require maintenance and repair that I’m hoping we don’t have to pay.  We should not have to get new tires or brakes, and anything mechanical will still be covered under warranty.  So, while our real cost for the lease payment is around $265 per month, I estimate that depreciation and repair costs on the Buick would have been around $125 per month if we kept it for an additional three years.  This makes the ‘real’ cost $140 per month.  Which I think is a great deal for a brand new Chevy truck.

I leased a long time ago, and it went very well.   I probably would have continued on except that I was, at the time, in a job that had my racking up lots of miles.  Now, that could very well happen again as circumstances change,  but for us in this situation, I think we made the right choice.

Readers and fellow bloggers, what do you think?  Did I make a compelling argument for leasing in our particular situation or am I going to be forever shunned? 🙂  Leave your thoughts in the comments below.

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Car Repair Fund To The Rescue

One of the great things about owning an older car that’s completely paid off is that you don’t have monthly payments.  However one of the bad things is that things go wrong.  As the car gets older, those things seem to get more and more expensive.  When you have older cars, a car repair fund is not just a good idea, it’s a necessity.

The Unfortunate End To An Otherwise Great Trip

We did a long weekend camping trip about 2 hours away, and pulled back into town Tuesday afternoon.  We pulled onto the street in front of the house, and I got out of the car to let the kids out and to get things ready so that I could back the RV into the driveway.  I immediately knew something was terribly wrong when I walked around to the passenger side and saw that the camper was red.

Further inspection showed that everything on that whole side of the car and camper was covered in a fine red mist.

Knowing the layout of the car, I immediately suspected that we were leaking transmission fluid.

So, backed the camper in, turned everything off, and took a quick peek.  Unhooked the camper, made a couple of phone calls, and added some fluid.

Popped it up to the service station right up the road and found that yes, we had a cracked fluid line.

Our Car Repair Fund At Work

Initial reports are that the transmission itself seems to be undamaged.  They really can’t do a thorough test on that until they fix the line, flush the remaining fluid and get it back to where it’s going to go.  That alone is going to cost $600.

And, that’s assuming that the transmission still works.   If there are any problems there, well, I don’t even want to think about it.

On the bright side, this seemed to happen at about exactly the right place.  Based on how quickly things were leaking, I think it probably happened very soon before we got home.  Had it happened around when we first left the campground, I’m thinking that the damage would have been far worse.  Plus, we’d have been stuck pretty far away from home.

So, as bad as it is, it could have been worse.  I’m just hoping we are past the worst.  Keeping fingers crossed!

Will know more soon.

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