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About 70% of all new car purchases are financed. Chances are you will be financing your purchase, unless you plan on paying cash for your new car. Most likely you are going to apply for a car loan.
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| Financing a new car purchase requires some research. Before venturing out to the car dealerships—do your homework! |
| If you present a car dealer with a low down payment, the money has to be made back. |
| Be aware of factory-to-dealer incentives. The secret …manufacturers refund a certain percentage of the car's price to the dealer. So even if the car dealer sells you a car at the invoice price, the dealer will still make money from the deal. |
| Look for manufacturer's incentive percentage and any rebates. Incentives are offered because manufacturers want to get rid of slow-selling cars or reduce inventory. This translates into cash rebates and low financing rates. |
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| Know how much you can spend before determining
what you can afford. Figure a three year time span
for making car payments. Generally 20 percent of
your net income is used in making car payment. |
| Calculate a monthly budget by adding up all of your fixed monthly expenses, such as your rent/mortgage, phone bill, etc. Subtract that from your net income. Then subtract your estimated extraneous expenses, such as food, gas, and entertainment. The money that’s left is what you’ll have to spend on a car each month. |
Include in your budget— the license, registration as well as monthly insurance costs, gas and maintenance. And don’t forget the extended warranty to cover any hidden or unexpected costs.
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| The more you know, the better off you'll be. And buyers be warned—car dealers are professional negotiators; they do it everyday. It's up to you to bring your confidence and research (do your homework) to the table. |
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Don't let the car dealer intimidate you. If you’ve done your homework, be relaxed and comfortable with the information you’ve researched. You hold all the cards— remember, the dealer does not want to lose the sale.
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If you are looking to finance a new car, click here. |
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