Financing a Car Purchase

Written by Doris Donnerman (last updated February 21, 2009)

"What can I do to lower the price of my car?" That is a question that many people ask, though they never seem to have an answer. What many people may not realize, initially, is that financing plays a huge role in the final cost of your new car. The amount of money that was financed, the length of the loan, and the interest rate all impact the final cost of your car.

All of these things might overwhelm someone who is new to car buying, and it is certainly difficult for even those who have purchased several cars before. Using these tips though, can help anyone get the best possible deal next time they are in the market.

  • Identify Your Needs. The potential buyer needs to understand exactly what they need in a car as opposed to what they want. While it is always nice to be able to get what you want, you only really need to get what you need. The wants are extras that can (and will) drive up the price of the car and therefore increase the amount of money that you need to finance.
  • Know Your Price Range. Knowing your price range prior to car shopping is going to help keep you from impulse buying something you later find you cannot afford. Impulse buying is one of the leading causes to higher financing costs.
  • Do Your Homework. Check the April issues of such magazines as Consumer Reports and Car and Driver. These popular publications issue reports about the new cars coming out that year, examining various categories such as repair rates and issues, depreciation rates, and so on. This information is all needed to be able to make sure you get the best value for the money that you are going to spend. Such information also plays a factor in how much money the lenders are willing to give you at financing time.
  • Make a Larger Down Payment. Large down payments can help immensely because the more money you put down at the time of signing means that the lender is going to be providing less. This results in lower financing costs. This also shows the lender that you are a fairly solvent or thrifty individual, and therefore a "safe" bet for a car loan.

Author Bio

Doris Donnerman

Doris is a jack of all trades, writing on a variety of topics. Her articles have helped enlighten and entertain thousands over the years. ...

MORE FROM DORIS

Fixing a Doorbell that Won't Ring

A doorbell is rather useless if it does not ring. Learning to fix your doorbell is easy and extremely useful.

Discover More

Pet Food Can Improve Your Pet's Coat

Your pet's coat can be something to be admired and proud of as a pet owner. By feeding your pets the right kinds of food, ...

Discover More

Stopping Dogs from Scratching Their Ears

It's not uncommon to see a dog scratching its ears, but sometimes they can scratch too much. If your dog is scratching ...

Discover More
More Car Tips

Getting Out from Under an Inverted Car Loan

Often car owners can find themselves in an inverted car loan situation without realizing how they got there. Here is how ...

Discover More

Figuring Out the True Cost of Car Ownership

On the average, when most people begin thinking of purchasing a new car they only really focus on the sticker price. A ...

Discover More

Understanding a Car's Sticker Price

One of the trickiest aspects of purchasing a new car is trying to figure out the sticker price. While it is true that ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] (all 7 characters, in the sequence shown) in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 9 - 0?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)