Pat Goss' Tips & Expert Advice

Getting A Loan For Your New Car

It used to be that the only place to get a loan for a new car was a local bank, credit union or other financing service. With the advent of the Internet, you can now compare car loan prices online and find lenders that don't exist elsewhere. However, if you find a loan online, don't assume it's the best deal. You should use caution when finding loans online and do your homework before siging any paperwork. Also, keep in mind that your local bank may be willing to give you a good loan rate because you have other accounts with them.

No matter where you obtain a loan, it will be made up of the principal (amount you borrow), the interest rate and the term of the loan, or the length of time you will make payments. Keep in mind that a lower monthly payment is not always best. To get a low monthly payment, you will have to pay the loan over a longer period of time and the total cost of a new car will be much higher.

Many new car buyers take out loans for as long as 60 months. While the lower monthly payment is enticing, you must always calculate how much it costs you in the long run. It's possible that, when you try to buy your next car, you will still owe more than your current car is worth. This is refered to as being 'upside down.' You should always avoid this debt trap.

Many websites offer the convenience of calculating different loans and monthly payments online. You should take advantage of these to avoid agreeing to the wrong loan. The extra time you take may save you hundreds of dollars or more. Some sites you can visit are bankrate.com and eloan.com. Before you plug in any information for a loan calculation, make sure the site offers privacy for that information. Just as you do diligent research for a new car purchase, you should investigate all your loan options carefully.