How To – Car Buying Tips Low Interest Vs Dealer Rebate

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    Are you looking for a new car? Well there are so many deals out there you may just want to change your mind if your aren’t. Actually although most car manufacturers are providing some very nice deals this has always been customary in the business and if you don’t see a sale this week just wait a bit and you are likely to see something amazing next week.

    One of the deals you are likely to come across is the choice between a low interest loan if you qualify or a discount in the sticker price.

    Discounts on the actually purchase price of the vehicle should not be confused with cash back deals which are added to the loan and actually increase the amount of money you need to pay back.

    A discount in the buying price should be looked at closely and you need to calculate the total cost that you will pay with interest over the time of the loan. When you can get enough back on the initial price you may find that paying a higher interest rate will still allow you to save over the life of the loan.

    On the other hand if you can get a true Zero percent interest rate you may come out better then a $1500 deduction off the total cost of the car at 6% or higher rates.

    In real terms if you were able to get $5000 off the price of a $25,000 vehicle that would bring your total purchase price down to $20,000 and at 6% interest you would save around $1,700 over paying the full price for the vehicle and getting a 1.5% interest loan… But you need to do the numbers based on your actual deal.

    Unfortunately calculating the amortization of your loan is not something that you can usually do when faced with a snap decision by your car dealer but remember when you are working with your car dealer the sale is always in your favor.

    The only time that a car dealer may provide you a quick deal that you can’t pass up is when they offer to give you more then your trade in is worth.

    If you find the dealer is willing to give you a choice of interest or discount you should collect all of the information you can about the loan and then tell your sales person that you need to talk with your bank about a special offer that they recently announced. This will give you time to bring home the documents and read them and also calculate the amount you could save by taking any of their offers or finding financing of your own.

    Some dealers may place a 24 hour limit on the offer and that is fine but reading the documentation and calculating the true costs of their offer alongside other offers is your best bet.

    You may even find that it is better to increase your down payment to reduce your overall cost.








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