Unless you are planning on paying cash for new vehicle, then you will want the best interest rate you can get. The best time to shop for your auto financing is before you look for the automobile you want to purchase.
When you have financing available, you minimize the time you will spent in making your purhase. If you allow a dealer to find you financing, you will not be guaranteed the best rate.
Purchasing a new car is the second largest purchase most of us will usually make in our lifetime. You will be making payments on this vehicle for the next five years. It makes no sense to spend anymore of your money than you have to in interest rates. That is literally throwing money down the drain.
If you have good credit you can get a decent interest rate, however it may not be the lowest rate you qualify for. By shopping around for your financing you will find the lowest.
If you do not have the best credit,financing is still available to you. However you will be required to pay a higher interest rate and your purchase will require a larger down payment. Each lender will differ in the amount of down payment they require. Some may require 10% of the purchase price and some may require a larger amount.
If you are looking to purchase (not lease) a vehicle your note will be a secured note. This means the lender is taking the vehicle as collateral for the loan. Should you default on a payment the lender will take it back and sell it to recoup a portion of their losses. The majority of car notes are secured loans.
With a secured loan the money can only be used for its intended purpose. In this case the purchase of a vehicle. However the interest rate the lender will offer you will depend on your credit history. The interest rates offered by the lenders will widely vary. Each lender has the right to set their interest rates.
With any loan it is in your best interest to borrow as little as possible. You may have a trade-in which will be used as a down payment, but if possible you will want to have some cash to go along with it. Your loan will be for the dollar amount owed on the purchase of the vehicle after the down payment has been figured in.
Some people may be able to get what is known as a signature loan or an unsecured loan. To obtain these types of loans you must have good to excellent credit because there will be no collateral involved. These types of loans can be used for anything. The interest rate may be a little higher, however you are not restricted to the age of the vehicle.
Lenders will typically not offer you a secured loan on a vehicle over 10 years of age. Lenders differ on what they will allow to be financed. In the case of an overpriced used vehicle, the lender will determine the amount of the purchase price they will loan toward the purchase. The lender as a rule will lend you what the vehicle is worth. The remaining balance you must pay cash if you wish to purchase that particular vehicle.
With an unsecured loan you are not bound by the lenders constraints. The lender is counting on you to pay the money back so there is no collateral to guard the lender against non-payment.
Whether you have good credit or bad credit you will find financing for a vehicle. The interest rate you pay on your loan is up to you. If you shop around and do not rely on the dealer to find financing for you, you can probably get a better rate by shopping around. Having financing available when you make the purchase of your vehicle will cut your time at the dealership in half.