The cars have become an essential part of life and are no more a luxury for any of the individual. Transportation is made very easy and the investment made is never considered to be waste. Most people will not have the hot cash to instantly buy their dream machine. Some of them prefer car financing and it is highly imperative that the borrowers keep the financing out of the car price negotiation. They fail to negotiate the car payment. It is an important point to negotiate the price of the car before arranging for the finance. It is not good to trust the dealers in all the cases and they will not be able to get lower interest rates every time. However, here are certain tips which should be considered mandatory to avoid some of the pitfalls in obtaining a wrong loan.

1> The fine print and the rest of details must be carefully studied before signing the deal.

2> Calculate the monthly payment and let it be within the monthly budget. It may create problems later if not checked properly.

3> Verify the interest rates mentioned in the car financing paper. Also ensure that it was favored by the borrower rather than the lender.

4> The amount financed should be properly documented.

5> The terms must have been mutually agreed and well negotiated before signing the deal.

6> Certain borrowers or lenders may consider the option of "Trade-in Allowance" and the "Trade Payoff". This must be listed clearly.

7> The loan contract and the sales order must be carefully framed. Lenders should not include additional ties like credit life, disability insurance, extended warranty, GAP insurance, appearance protection package and much more things.

The buyers must be careful enough to pay a lump sum down payment. This will reduce the interest rates and also the loan tenure. A rendezvous meeting with the lender or a dealer must be arranged and an open conversation must be engaged. The market is highly competitive and the borrowers are assured to get a good loan amount with good terms. The emphasis should be laid in knowing the credit rating before car financing. The buyers must collect copious amount of information before deciding with the particular lender and the car. The enormous amount of information collected will help in better comparison of rates.

Car dealers also offer financing options but it is not advisable to avail such options. They have a very high rate of interest and other hidden charges. A traditional car loan will take up to 4 or 5 years term. Lower amortization is possible by opting for a longer period of loan. However, the borrower is left with no option but to pay excess amount of interest during such a longer period. Car financing is a wonderful way to grab the brand new car but it has to be done carefully. It is a tiresome and cumbersome process. This process has fulfilled the dreams of millions of lives and hence an effective one.

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