These days when you step into a car showroom, there will be two important things that the dealer will be offering you. First, he will be showing you cars, and secondly, he will be offering you finance packages. The fact of the matter is you may probably buy a car from your bank, even if they started offering them. You may wish to apply the same scrutiny to the finance packages available at the car dealership and choose to buy only your car there and the finance package elsewhere.

It may be that there is nothing wrong with the finance being offered at the car dealership and in many cases, this will be true. However, you must be aware that just because you buy your car there does not in any way imply that you have to use the finance options and terms that they are offering. You are always free to take a loan from somewhere else, such as a bank, and pay for the car outright, and then make the loan repayments to the bank as with any other loan.

It would help if you were careful to find out exactly how much you are being charged for car finance. The primary way to calculate the charge of any credit is by using the APR or annual percentage rate. This calculates the cost of the loan using a standardized formula, and all lenders must use the same method of calculation. However, just because a car dealer’s APR looks attractive does not mean your search is over. You should also always find out how much the car would cost if you paid in cash. Remember that providing a cash discount is the same as charging extra for credit. If the cash price is lower, then you may be better off getting the loan from elsewhere and paying for the car with cash, this will take advantage of the better price, and you will have a smaller amount to pay back to your lender.

The other thing you should look out for is down payments and closing payments. These are payments that are paid at the beginning or end of the term of the loan. While the monthly payment terms may be attractive, it could well be the case that there are considerable additional payments to make and you should not forget to calculate these in when pricing the finance.

Car finance can be almost as important as the deal you get on the car itself, and you should always regard getting a good deal on the financing as part of the process of getting a new car.

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