Tips for Buying Cars With Low Car Payments
Being armed with tips for buying a car with low payments is as easy as doing your homework. Knowing the difference between the factory price of an automobile versus the price of dealer markup is just as crucial as having an understanding of gas mileage and fuel efficiency when in negotiations. Researching and shopping around are key when deciding on a new car that will fit in your budget.
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Shop Around
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Car dealerships have the availability to finance your car loan, several other options can be explored before making an informed decision. Credit unions and banks offer loans and sometimes have better interest rates. Dealerships are considered "middle men" with loans, resulting in increased interest rates for them to make money. Best to go straight to the source and apply for a loan with your personal banking institution.
Down Payment
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A down payment of 10 to 20 percent or more will not only help you to negotiate a lower interest rate on a loan but will also reduce the auto loan balance. If you are buying a car priced at $15,000, a down payment of $3,000 would help with creating a lower car payment. More money with your down payment will also help if your FICO score is low and you are considered a credit risk. The higher the down payment, the lower your monthly loan payout amount.
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Trading In
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Trading in a car will also help with the down payment on a new automobile. Combining a trade-in with a 20 percent down payment will help efforts to keep the monthly payment low. Sometimes you will make more money if you sell the car on your own, using those funds along with your down payment. Checking the Kelley Blue Book value of the car will help determine which avenue will suit your purpose.
Leasing Options
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The Federal Trade Commission recommends not leasing a car "just because the payments are lower than on a traditional auto loan." Leasing payments are typically lower, but you do not own the car. Leasing can be a complicated process from beginning to end, with various fees cropping up at the end of lease-term, such as excess wear and tear, excess mileage and end of lease fee.
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References
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