Know before you owe.
That鈥檚 the overall advice of the U.S. Consumer Financial Protection Bureau (CFPB).
And while it sounds simple enough, a lot of thought should go into financing a car, truck or SUV if you don鈥檛 want to overpay 鈥� or overextend yourself financially.
Over the next four weeks, we鈥檒l share with you some of the CFPB鈥檚 advice on financing a vehicle.
Four areas we鈥檒l cover:
- How to shop for your auto loan, not just your car [Part 2].
- Exploring loan choices because hundreds, even thousands of dollars are at stake [Part 3].
- Knowing what鈥檚 negotiable 鈥� and it鈥檚 not just the price of the vehicle or the interest rate [Part 4].
- Understanding how to close the deal before you drive away [Part 5].
鈥淭ake control of your auto loan,鈥� says the CFPB on its comprehensive website. 鈥淲hether you鈥檙e a first-time borrower or a pro, getting an auto loan can be complicated. Learn how to prepare so you can save money, reduce stress, and get the auto loan that鈥檚 right for you.鈥�
Financing a car is the second-largest financial obligation for many Americans (after a home mortgage), so it makes sense to take the time to understand the process and get the right deal.
To help you along, the CFPB offers a 16-step auto loan shopping worksheet, Comparing auto loans, which also highlights seven factors that you can negotiate.
Those seven factors are (1) the price of the vehicle, (2) additional features, services or add-ons, (3) expenses such as delivery charges and origination, document and preparation fees, (4) down payment, (5) trade-in value, (6) interest rate, and (7) length of loan in months.
The CFPB also recommends taking the printable worksheet with you to the dealership to 鈥渟how you are serious about getting the best loan鈥� if you plan to finance the vehicle there.
Whether you follow that advice is up to you, of course, but determining your upfront costs, calculating how much you will need to borrow, knowing how much money you鈥檒l pay over the life of your loan, and finding the total cost of your purchase should be a part of your process.
Then you can be more confident that your vehicle purchase will fit into your budget and that the monthly payments won鈥檛 cause financial problems in the future.
The vehicle you want may not be the one you can afford, so it pays to know before you owe.
