Getting around behind the wheel is a big deal for millions of Americans. About 16% of the average American budget goes toward vehicle costs and fuel. It’s the second biggest expense after housing, but before items like food, education and saving for retirement.
Those costs are likely to rise soon and could wreak havoc on many families. It’s easy to see how a spike in interest rates, an economic shock or falling used-car values could quickly topple this car financing house of cards, with wider repercussions not unlike the 2007 subprime mortgage collapse.
While paying cash is an option, that’s not feasible for most shoppers who need new vehicles ASAP. Instead, buyers need to shop for loans with flexible terms and competitive interest rates. Generally, lenders favor applicants who make a down payment on their vehicles because it shows commitment and reduces the amount they borrow. It also lowers monthly payments, shortens loan terms and may help borrowers qualify for better insurance.
Consumers can find a lender that best fits their needs by applying for financing at dealerships, online car retailers or with private-party lenders like banks and credit unions. Most dealers have relationships with several car finance companies and can offer a variety of loan options to their customers, including 0% interest and manufacturer-sponsored incentives. It’s important to know what your credit terms will be before heading to a dealer so you can negotiate effectively. This will include annual percentage rate (APR), loan term in months and maximum amount you can borrow. cars on finance
