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How to get the best value out of your car loan

Car loans can be pretty tricky to get, especially for those who don’t exactly have the best credit record. And when your loan does get approved and you’re driving home in your new car, the feeling of accomplishment is there and you can’t wait to go to places in your new wheels.

But before you start celebrating, don’t forget that you still have payments to make and a responsibility with the car finance company and your car.

To help you get the most out of your car loan, here are a few ways you can make the most out of your car loan:

  • Choose the shortest loan possible. With more technology and research going into new car models, they have become more expensive with some cars having you chained to payments for more than five years. This can be a problem because in that time frame, a lot can happen and your car depreciates in value with each passing year and by the time you’ve made your final payment, your car may be deemed obsolete by that year’s standards.

The best way to battle this is by choosing a shorter car loan payment. It may be a little pricier compared to the longer payments, but it will be for the best to fully pay the vehicle in just a few years than in five to seven.

  • Beware of financial scams. There are always going to be people who will take advantage of others in need. Some finance companies will “help” you get your car. But once all is said and done and you’ve finally gotten the keys, the dealer will call you saying that they never received the payment from the company.

This puts the buyer in hot water as they must now return the car or negotiate a price with the dealer at a ridiculous interest rate, or they can be charged with the rental fee for the time they had the car with them. This is called the yo-yo scam and there are many others like it. So before trusting a so-called finance company to help you, it’s best to do a quick background check which may include customer feedback, credibility, etc.

  • Do your research. Most of the time, buyers just look at the monthly fee of the vehicle, think to themselves “oh hey, I can make those payments” and then focus on that one fact as they take care of the paperwork.

The downside to this is that the buyer could be unaware that they are paying way too much for the vehicle and the finance and the car’s trade-in value could be a lot less than that. This is why it is very important to do your research and talk to the agent about the trade in value of the car, and discuss other financial aspects so that nothing will come as a surprise when the time comes.

Increase payments whenever possible. Once you’ve made a deal with the finance company about loans and the payments, you’re mostly all set. But when your financial situation gets better after a year or two, you can talk to the finance company to increase the payments. An advantage of doing so is that you can lessen your interest rate and finish off your loan payments faster.

  • Let’s say that you’ve been making great progress with your car loan payments, always making them on time and never missing a deadline. But a family situation has taken hold and you miss a month’s car payment.

The best way to resolve situations like this is to communicate with the finance company. Tackle the problem of late payments as soon as possible, because this shows initiative and your commitment to the company that’s helping pay for your vehicle. They can usually help you resolve the situation so you can get back on track to making the payment deadlines.

Bottom line is that communication, making payments on time and doing your own research aside from what the companies and the dealers tell you is the key to getting the best value for your vehicle. Don’t settle with what you’re just told and always question anything that seems even a wee bit iffy. And you can be well on your way to getting the best deal for your vehicle now and in the future.

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