by Richard J. Short, Lending Manager
Before you hit the showroom and fall in love with your dream car, there are a few things to consider about buying and financing a car that you should think about first. The first thing that many consumers don’t know is that the cost of buying a car is composed of two or three facets. The two items that apply to all transactions are the price of the car and the financing. The third may be a car to be traded.
Before talking about anything else, you should determine what the final price of the car will be. There are many dealers who still negotiate price for both new and used vehicles. More and more though have gone to posting their best offer on the windshield. There are pros and cons either way.
If you like to negotiate and you have the knowledge of what a vehicle should cost, you may get a better deal. That being said, the dealers who post their best price know what their competitors are advertising and will want to appear as competitive as they can.
Financing Your Purchase
At Advantage, we encourage our members to get pre-approved before they even begin to look for a vehicle. How disappointed would you be if you found that car you’ve been dreaming about only to find that you can’t get financed or can’t afford the payment?
Worse, what if you’re crazy about a car and you go ahead and buy it and end up with a much bigger payment that you planned on? Find out what you can afford and get pre-approved before you get emotionally attached.
With new cars, sometimes dealers can offer special financing deals. In fact, sometimes you can get a loan at zero percent. But look before you leap. Before you jump at that great financing offer, find out if there is a price reduction if you don’t take it – remember again, keep financing separate from price. Many times, the financing offer is at the expense of a higher priced car. Most of the time, it’s better to take the lower price and get a better rate at your financial institution.
The criteria as to whether you should refinance is pretty simple; find out if you can get a better rate than you are paying at the remaining term of your current auto loan. If you can, you’re going to save money. It’s simple mathematics.
You can refinance at your remaining term, or you can stretch out your payments to get a lower payment. The former is going to save you in finance charges. The latter is going to cost you less per month, but you might not get the benefit of the interest savings.
How soon after you buy can you refinance? You can usually refinance as soon as there is a loan on the books at the lender that you financed with. At Advantage, we have had some members tell us that they’ve been told that have to wait a certain amount of time before refinancing. Unless your loan documents say otherwise, a lender won’t refuse a payoff check. You also can refinance as many times as you want with different lenders. If you financed with one lender when you purchased, then paid that lender off, you can still go to yet another lender.