A Refresher on Financing Your Car

I have been getting a lot of questions on car financing. So, I thought I would cover some key points to know. The key to any type of consumer debt is keeping the interest rates as low as possible. Thus, I wanted to go over with you the key pieces of information that you need to know when attempting to get the best deal possible on a car loan.

1) You have to know your credit score. It is almost impossible to get the best rates without a score north of 670. I am finding more and more people who have great credit scores and are paying too high of interest rates.
2) It is important to know the going rates. You can get a good idea of the going rates by going to www.bankrate.com. The best rate that I know of is at www.penfed.org. There is more on that below.
3) You can refinance an older car. Most consumers think about refinancing a home loan to a lower rate. Most don’t think about refinancing an older car. The good news is that you do have the ability to get that interest rate lower.
4) You should never pay up-front fees when you finance a car.
5) Always take out guaranteed asset protection or GAP insurance. This is important insurance to have for your car loan. If you total your car and you owe more than the insurance company is going to pay, GAP protection picks up the difference.
6) If you are upside down in a car, it is almost impossible to get the loan refinanced.

The best car financing source that I have come across is the Pentagon Federal Credit Union. They are the credit union for the United States Pentagon. The website is www.penfed.org.

If you or anyone in your family (includes extended family) is active or has served in the US Army, US Air Force or Coast Guard, or Reserve, National Guard, or ROTC, then you can join the credit union for free. If not, you can join the National Military Family Association for $20 a year. The only downside is that you must join the credit union prior to applying. You do need a good credit score.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.