Financing a new car is not as simple as getting electricity turned on in a new home or apartment. Buying a big-ticket item with a loan for $20,000 and up should prompt some research, yet many consumers who invest immense effort in negotiating the purchase price let their guard down when it comes to the cost of financing. Securing a low-cost car loan doesn?t require an advanced economics degree, but it takes a little more effort than simply accepting whatever the dealer tells you will be your new monthly payment. These five simple steps could save you hundreds or even thousands of dollars.
1. Determine Where You Fit into the Car-Loan Landscape
Like it or not, your credit score matters. If you like it, you probably have a high FICO score in the 740-to-850 range. If you don’t like it, it may be because you’re a credit-challenged buyer, with a FICO score below 580. Your credit score will typically determine how much interest you have to pay on a loan. ?Higher credit scores translate into lower rates in most financial transactions,? James E. Houston, senior director of auto finance at J.D. Power, told us. ?Consumers should understand their credit score before they look for financing, or determine it during the process. Consumers should monitor their credit score and credit report and have mistakes corrected when possible.? Make sure your current credit score is based on accurate information. For example, if your credit score has taken a hit because of a debt a...