Sometimes, dealers offer very low financing
rates for specific cars or models, but may not be willing
to negotiate on the price of these cars. To qualify for
the special rates, you may be required to make a large down
payment. With these conditions, you may find that it's sometimes
more affordable to pay higher financing charges on a car
that is lower in price or to buy a car that requires a smaller
down payment.
Before you sign a contract to purchase or
finance the car, consider the terms of the financing and
evaluate whether it is affordable. Before you drive off
the lot, be sure to have a copy of the contract that both
you and the dealer have signed and be sure that all blanks
are filled in.
Some dealers and lenders may ask you to buy
credit insurance to pay off your loan if you should die
or become disabled. Before you buy credit insurance, consider
the cost, and whether it's worthwhile. Check your existing
policies to avoid duplicating benefits. Credit insurance
is not required by federal law. If your dealer requires
you to buy credit insurance for car financing, it must be
included in the cost of credit. That is, it must be reflected
in the APR. Your state Attorney General also may have requirements
about credit insurance. Check with your state Insurance
Commissioner or state consumer protection agency.
Trading in Your Old Car
Discuss the possibility of a trade-in only after you've
negotiated the best possible price for your new car and
after you've researched the value of your old car. Check
the library for reference books or magazines that can tell
you how much it is worth. This information may help you
get a better price from the dealer. Though it may take longer
to sell your car yourself, you generally will get more money
than if you trade it in.
Considering a Service Contract
Service contracts that you may buy with a new car provide
for the repair of certain parts or problems. These contracts
are offered by manufacturers, dealers, or independent companies
and may or may not provide coverage beyond the manufacturer's
warranty. Remember that a warranty is included in the price
of the car while a service contract costs extra.
Before deciding to purchase a service contract,
read it carefully and consider these questions:
