These days when you step into a car showroom, there will be two major things that the dealer will be offering you. One will be the car he will be buying, and the other will be the funding options. The buyer will have to view the two issues in their proper perspective. The buyer shouldn't be carried away by his eagerness to buy a car; although car dealers normally offer a funding package along with the car, the buyer shouldn't be carried away by his eagerness to buy a car, instead he should give due consideration to the package offered and should also consider getting financial assistance somewhere else.
It is not however to be misconstrued to mean that the buyer should reject outright the financial package offered by the dealer. The point is that the buyer is not obliged to agree to the terms offered by the dealer because he has the right to choose the financial package that he is comfortable with. In other words, the car buyer has several payment options - he can accept the dealer's offer or he can make his own arrangement with a bank or financial house, or he can secure a loan and pay the car in cash.
A car buyer who avails of a financial plan must pay attention to the interest that he will be charged with. The interest can be computed with the use of the APR or annual percentage of rate formula. The APR calculates the interest rate for the year that is used on a loan and is the standard use by most lenders and banks. The buyer should be apprised that the APR is not the sole basis for availing a financing package. Taking advantage of a cash discount offer is advised once his savings has been calculated. He must note that the interest rate is based on the price of the car, and if he pays in cash he can get a discount. The bottom line is that he could be paying a lower installment if he takes a loan because the loan principal will corresponded with the discounted price of the car, thus the interest will be based on a lower amount and the installment will be correspondingly lower.
Aside from the monthly payments, down payment and closing payments also need some scrutiny. The down payment and closing payments are portions of the total price and miscellaneous fees of the car to be paid in cash to the dealer, so the reason why you may be paying lower monthly installments is because of high initial and closing cash outlays.
Car finance can be almost as important as the deal you get on the car itself and you should always regard getting a good deal on the financing as part of the process of getting a new car.
It is not however to be misconstrued to mean that the buyer should reject outright the financial package offered by the dealer. The point is that the buyer is not obliged to agree to the terms offered by the dealer because he has the right to choose the financial package that he is comfortable with. In other words, the car buyer has several payment options - he can accept the dealer's offer or he can make his own arrangement with a bank or financial house, or he can secure a loan and pay the car in cash.
A car buyer who avails of a financial plan must pay attention to the interest that he will be charged with. The interest can be computed with the use of the APR or annual percentage of rate formula. The APR calculates the interest rate for the year that is used on a loan and is the standard use by most lenders and banks. The buyer should be apprised that the APR is not the sole basis for availing a financing package. Taking advantage of a cash discount offer is advised once his savings has been calculated. He must note that the interest rate is based on the price of the car, and if he pays in cash he can get a discount. The bottom line is that he could be paying a lower installment if he takes a loan because the loan principal will corresponded with the discounted price of the car, thus the interest will be based on a lower amount and the installment will be correspondingly lower.
Aside from the monthly payments, down payment and closing payments also need some scrutiny. The down payment and closing payments are portions of the total price and miscellaneous fees of the car to be paid in cash to the dealer, so the reason why you may be paying lower monthly installments is because of high initial and closing cash outlays.
Car finance can be almost as important as the deal you get on the car itself and you should always regard getting a good deal on the financing as part of the process of getting a new car.
About the Author:
Jewelry designer and artist Caroline Jasper creates one-of-a-kind handcrafted gemstone jewelry - each piece handcrafted by an artisan.
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