Understand Your Finances
Sunday, March 4th, 2007
Your lender. Unless you borrow money privately, you’re going to be working with a bank, a credit union or an automaker’s financing arm. There are various pros and cons to each scenario.
The car you’re buying. Are you buying a new car? A used car? A very used car? New car rates are oftentimes the lowest.
Loan term length. When automakers first introduced 0 percent financing to keep cars selling after the Sept. 11 terrorist attacks, they were only offered on two- and three-year loans. Now, some automakers are offering 0 percent financing on five-year loans. But in general, longer loans have higher interest rates.
Your credit rating. Borrowers with better credit get lower rates. Jack Gillis, public affairs director for the Consumer Federation of America, estimates that only 15 percent of car buyers qualify for 0 percent offers from automakers. He also reminds that these loans are designed to sell otherwise unpopular cars.