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Here are standard five major tips that will help you negotiate a fair loan deal
|Want to Avail a Car Loan? Here Are Some Tips You Must Check Out! : eAskme|
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1. Do not negotiate on the EMIYes, you read that right. We want you to negotiate the price of the car you desire not the EMI. Most dealerships have a sneaky way of making you pay according to your capability. For example, the moment you zero in on a car and are ready to opt for financing, you will come across a sales rep who will be "on your side". This guy will try to find out "how much you can pay each month" rather than how much you would pay for the car as a whole!
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If this happens, take a step back. Prices should never be a matter of your payment capability. The dealer and the sales rep are looking to make the highest possible profit from every sale. So in spite of what your sales rep says, try to negotiate on the full price of the car. Get a discount on the total price. It is easy enough to understand. When the total price of the car goes down, so does the cost of the loan.
2. Whom should you lend from?You must not be aware that when you go to buy a vehicle, your dealer would most amicably suggest a bank that will offer you instant loans? It is because they work in partnerships and share the margin. If you fall for this scheme, you will be shelling out a lot more than you can afford to. We have known people dish out more than $25000 for a $21,500 ride.
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If you wish to go for an auto loan, you should first start shopping for loans and then start looking for dealers. This way, you can always tell when your dealer is trying to take you for a ride. Check out all the local banks and online car loan policies. Compare at least 8-10 loan terms before you decide on what is the best for you.
Always remember, just buying a car is not enough. You should also have the money to properly maintain it and enjoy the benefits of having a personal 4-wheeler.
3. What is the best interest rate?Is there anything else other than the interest rate that should concern you while buying the car? Yes, but the interest rate should be your prime concern. As we said before, you will need to window shop a lot before you can decide which loan will be the best for you and your ride.
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Your credit score will directly influence the interest rate and the loan amount. Therefore, if you have a lot of outstanding debts, you may want to go for a professional loan consolidation. Will help you repair your credit score, and at the same time, get a better interest rate for your loan amounts.
4. What is the ideal tenure?Car dealers love to lower the EMI values so that their customers have to pay the lowest amount each month. This is entirely benevolent, isn't it? Well, no! Most dealerships just play this card to make the payment tenure last longer. It automatically means you pay increased number of installments and sometimes end up paying a single car loan for over seven years!
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This set up is more than ridiculous since sometimes, payers end up paying more interest than the principal amount. Make sure that the tenure is small. Five years is the maximum you should settle. If you are having trouble figuring your finances out, you can hire a remote financial advisor or consultant to sort out your finances for you.
5. What’s the deal with add-ons?If you have already been to a couple of car dealers, you must have noticed how they try to push add-ons to your choice. That is possible because over 30% of the profits a trader makes comes from add-ons only. That's a staggering figure that tells us how much we can save if we do not agree to finance the cost of add-ons.
These add-ons can include in-car entertainment, front grille, spoilers, hood protectors and speaker systems. You can always get them later, even online for less than half the price your dealer is offering right now!
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Including add-ons automatically increases the price of your chosen ride exponentially. Therefore, when your dealer is trying to push you into buying them, just politely say "No" and move forward with the negotiation.
If you are getting an unbelievably low-interest rate, check if your loan was given to the car and is a common type of secured loan where your car is the collateral. I just mean that while you will be paying off the installments, you can drive the vehicle. However, if you fail to make payments, the loan company or the bank has complete right to claim the vehicle and sell it to recover the pending loan amount.
There are quite a few details about car loans that you cannot know unless you plunge. You need to go to the market a couple of times to compare and contrast the prices different banks and credit unions are offering. An auto loan or a car loan is a part of the daily life. Therefore, you must find out a loan that best suits your living costs. A loan should be affordable, and it should smooth out financial bumps caused by big buys.