Car dealers often advertise very low interest rates on loans to buy their cars. They will also offer grade trade-in deals and free upgrades on certain models. While these offers are all very tempting, you must still shop around carefully when seeking the best car loans.

Scrutinize special offers. There are many things, which go into calculating the overall price of the purchase and you shouldn’t forget any of them. For example, most people look straight at the interest rate to see how good an offer is, but you should also look at the size of the down payment required, arrangement charges and early termination and other penalties. All of these are important aspects of the offer.

Understanding Low Interest Loans

When considering a dealer’s credit offer, ask the following questions:

• To qualify for the financing, will you be charged more for the car? Or put another way, would the price be lower if you paid cash?
• How much of a down payment is required. 25% to 30% would be higher than usual.
• Is the loan unusually short, for example 24 or 36 months?
• Is there a payment due at the end of the loan, possible a couple of thousand pounds?
• Are you required to buy optional extras such as power steering in order to qualify for the loan?
• Is the financing offered ending soon? Do you have to order the car immediately?
• Does this rate apply to all the cars in the showroom, or just selected models?

Questions About Other Promotions

Other special promotions include high trade-in allowances and free or low-cost options. Some dealers promise to sell the car for a stated amount over the dealer’s invoice. Asking questions like these can help you determine whether special promotions offer genuine value.

• Does the advertised trade-in allowance apply to all cars, regardless of their condition? Are there any deductions for high mileage, dents, or rust?
• Does the larger trade-in allowance make the cost of the new car higher than it would be without the trade-in? You might be giving back the big trade-in allowance by paying more for the new car.
• Is the dealer who offers a high trade-in allowance and free or low-cost options giving you a better price on the car than another dealer who doesn’t offer promotions?
• Does the dealer have cars in stock that have no expensive options? If not, will the dealer order one for you?
• Are the special offers available if you order a car instead of buying one off the lot?
• Can you take advantage of all special offers simultaneously?

You never have to accept a dealer’s financing options. You should always drop by the bank and see what rates they will offer you. It may be that the dealer’s offer is not as attractive as it first appeared.

Once you decide which dealer offers the car and financing you want, read the invoice and the installment contract carefully. Check to see that all the terms of the contract reflect the agreement you made with the dealer. If they don’t, get a written explanation before you sign. Careful shopping will help you decide what car, options, and financing are best deal for you.

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