Last week we looked at three basic car loan tips to help you on the journey to getting the best vehicle you can at a price you can afford. We at Broadway Auto Loan believe that you can never be too prepared when making a big automotive choice, so this week we’re coming back with four more basic car loan tips.
Be wary of hidden financing costs
While it might seem logical to roll things like warranties or car insurance into your financing costs for easy one-stop shopping, be very careful of these extra costs. You may not have to think about them much after you sign the paperwork, but you will be paying interest on them for the entire length of the loan, which can definitely add up.
Shorter loan terms for the win
Some dealerships will offer loans that take years to pay off, but the shorter the better. Shorter financing agreements mean fewer months paying interest. Once the car is paid for you can be scott-free, or trade it in while moving on to another vehicle.
The black hole of car finance: negative equity
Negative equity is when you owe more on your car than it is worth. Some dealership will offer to put lump those payment in with the rest of your financing, but that can just compound your debt. If you can, pay off your current vehicle before trading it in. Which brings up to…
How much is your current vehicle worth?
When going in to get new or high quality pre-owned vehicles, it’s always valuable to know what trade in value you are going to be able to get on your current car. You can find out this information online by searching for the year, make and model of your vehicle. Be aware that this information changes from day to day, so it’s best to check it out right before you go to the dealership.