Why Should Auto Buyers Think About Car Financing First?

Normally, financing is one of the last things that people think about when they are in the market for a new car. However, it is always better to check out rates and availability of auto loans Denver first. After that, it is time to go shopping for a car. This makes it a lot easier to shop for the right new or used car. Buyers should have some idea of their budget to help them shop for vehicles that fit into their price range. Also, buyers who have already been approved for financing are likely to have some leverage to negotiate a better deal.

Loan Approval Letters

Most auto lenders will give prospective borrowers an approval letter. This gives borrows the assurance that they probably can get approved for auto financing. If they are approved, they should know how much money the bank will lend. The thing to remember is that sometimes these approval letters don't really commit the lender to anything.

For example, the lender may just do a quick credit check. However, other factors, like other outstanding debt, might still get the hopeful car borrower declined. Also, some lenders are picky about what types of cars they care to loan money for.

This is especially true for used cars. A loan approval letter provides some assurance, but it isn't an ironclad guarantee that a lender will make a final approval to fund the purchase of a new car.

Monthly Payments

Some auto buyers are lucky enough to be able to afford to pay cash for a car. However, most buyers have to borrow money. In this case, potential purchasers are likely to be more worried about the size of the monthly payments than the overall price of the car.

Down Payments for Cars

It is certainly possible to purchase cars without offering a down payment. However, buyers will find that offering to put down $500, $1,000, or $1,500 for a down payment will open up better terms both at the dealership and with most auto lenders. This shows that the buyer is financially stable enough to contribute the initial purchase, and it also allows the buyer to drive a car out of the lot that is not already underwater on a loan. Most experts say that new cars lose up to 20 percent of their value as soon as they leave the lot because they are no longer considered new cars.