How To Finance A Used Car
When you want to buy a used car, the first think you need to decide is the mode of payment. The most advantageous one would be paying in cash. This would save you from paying extra amount in interest from the loan for your vehicle. Depending on the price of the car and its terms you may save up to 30% in cash on the interest amount.
Taking out money from your savings or investments for the car means reducing the size of your principal. If you get a really, low rate of interest, say 2 percent, it would be worth financing your car because then you can invest the money and earn about 7% to 8% per annum. However if you had the choice to finance at 10% or pay cash, you should opt for paying cash.
The disadvantages of getting a loan would be higher monthly payments, large down payments generally in cash; increase in the cost of maintenance after the loan is paid. Another advantage of paying cash is that you can drive the car out of the showroom that very day.
When you approach a dealer, go prepared with all necessary information regarding the car you are looking for. Don’t let the salesperson give you a one-way sales talk. Negotiate a price before you let the salesperson know that you are paying for the car in cash. This should be done just before you are going to sign the loan papers. This will assure you of a fair deal.