The WORST place to get financing is at a car dealership. You have no options to compare, no bargaining power or any advantage. You may get some ‘deal’ proposed to you, but car financing is best arranged outside of a car yard. By agreeing to whatever the car sales team quotes you, it’s almost certain you will overpay.
The cheapest interest rates on car loans will be on secured terms – this means the lender has a right to sell your car if you can’t make the repayments (exactly like a bank can sell a house if the mortgage isn’t repaid). You’ll be in a better position if you can fund a good portion of the loan – 20% or 30% will give the lender confidence and a lower interest rate.
Quite simply, to arrange the most attractive car financing, you’ll need the lowest interest rate, lowest application fees and the shortest term with the most frequent repayments (i.e. weekly vs monthly). i.e. If your loan is $20,000 and your interest rate is 15%, you’ll pay $8,000+ in interest if you pay it back over 5 years, but only $3,200 if you pay it back in 2 years.
Most lenders charge at least $25 or even $50 for each missed payment, plus you’ll have pressure to meet the next payment while you sort out the overdue payment. Budgeting for car insurance can be a hassle as the costs can be higher. Be sure to so prioritise your repayments with your rent and mortgage to avoid any hassles from your car finance company.