While it would be ideal if people did not have to finance their auto purchases, the fact is that most people are making a car payment. The average monthly auto payment for a single car is a whopping $479. Research has shown that many people spend a substantial amount of time shopping for a great deal on a car only to fall prey to predatory dealer financing. Often, dealers charge higher rates than the credit of borrowers really warrants. Edmunds.com reports that the average car loan is nearly $25,000 dollars. Research shows that bank rates on loans are often lower than dealer rates. Credit unions are often a full 1.5% lower than the best bank loans. If a person were to get a 60 month loan with an interest rate that was 2% lower than the dealer rate (assumed 8%), they would save an impressive $23.59/month. This savings could be worth over $100,000 at retirement (EVEN IF THIS WERE THE ONLY AUTO LOAN THIS INDIVIDUAL EVER HAD!). Use the resources below to learn how to save substantial amounts of money on auto loans or to get out of a bad loan you are in.
- http://www.statefarm.com/learning/calc/carloan.asp this great calculator allows you to easily see how much you will actually save based on different loan interest rates. Use it to determine how much you should be contributing to your qualified retirement plan.
- http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/ABCsForAGreatCarLoan.aspx provides a great list of tips for getting the best possible loan. It explains how you can prepare to ensure you don’t get taken advantage of when you are getting your loan.
- http://www.capitalone.com/autoloans/refinance/?linkid=WWW_Z_Z_Z_Z_H1_04_T_ALRF Are you already stuck in a high-rate loan? This website allows you to see if it would be possible to reduce your rates even further by refinancing your auto loan.
- http://www.bankrate.com/auto.aspx Credit Unions generally have the best rates for auto loans. Use this neat Bankrate.com tool to comparison shop among various auto loans.