Okay,
you’re shopping for a new or used car and you need a loan. What will your payment
be? One of the “tricks”
the dealers like to play is to ask you what you want your payment to
be. They know that most
people will ignore the sales price and interest rate if they get the
monthly payment they want.
Are they giving you a good deal? You’ll know if you go to the
dealership prepared.
First,
make a few calls. Call
your local credit union and hometown banks. If you are not a member of a
credit union, you should be.
Credit unions typically offer much more favorable loan and
savings rates than most large banks. They will tell you on the
phone what rate they offer on the car you are looking for. They will even pre-approve
you for a loan.
After
you have your loan rate, check out the current retail and wholesale
values of the vehicle you are shopping for. There are many free online
guides at places like Kelly Blue Book, NADA and Edmunds.
Now, using a car loan calculator, like the one
above, you can easily figure out what your payment should be. If the credit union is
offering you a 6% car loan for 48 months and the dealership is
offering their 48 month loan at 7.5%, you already know what to
negotiate. Don’t fall
into the trap of comparing payments: a 6%, 48 month car loan will
give you the same payment as a 14%, 60 month car
loan.