Used car prices dip, auto financing perfect solution for vehicle buyers
Posted on Monday, December 16, 2013 at 10:13:33 AM
The price for that used car on the lot is on the way down, according to Edmunds.com's Used Car Market Quarterly Report. The average sale price in the third quarter of 2013 was only $15,617, nearly 3 percent below the previous quarter's figure, and 0.9 percent lower than the same time last year.
This is in part due to better new car sales, and a steady improvement across the sector might mean ample opportunities for potential buyers. However, the costs could get high, and affordable auto financing and a smart strategy can help manage these added expenses.
Recently, Home Loan Investment Bank's Christine Dikdan highlighted a few key steps for anyone interested in a new or used vehicle. For starters, used car shoppers should plan for the purchase.
"Make a list, what you can afford and what you want in a vehicle," she explained. "Check it twice. What you can really afford - want you can live with or without in a vehicle - and plan extra money for the 'storm.' Check consumer reports to find out which vehicles are naughty or nice. Is the vehicle you want on the reliable list - if not can you live with and afford the possible shortcomings, or should you choose differently?"
In addition, there are plenty of steps alongside auto financing that can assist buyers with the monetary aspect of vehicle shopping.
"Get the insurance price and add it to the monthly payment," Dikdan said. "Take average gas price and average monthly mileage and mpg on the vehicle you are purchasing, and add that to the monthly payment. Get a warranty price, if not paying cash, and add that to the monthly payment or have it included in the loan. Figure extra money for items not covered - general maintenance, items not included in an extended warranty, or insurance deductibles."
Borrowers also have the option to prepay their loans, according to Dikdan. This could be an ideal strategy for auto financing because few loans have a prepayment penalty, and buyers only pay interest for the amount of time the loan is open. These solutions could be especially valuable at the end of the year, when sales are slow and dealers are doing whatever it takes to get people in the door.
At this time, "you can usually negotiate a better price, better financing, or possibly both," she noted. "For buyers expecting large tax return refunds, I recommend to file early, get refunds early, pay off the 'new vehicle loan' early, and totally reap the rewards by saving money on price, financing options and avoiding paying interest for the full term of the loan. Even if you can't or do not want to pay off the loan in full, just by making regular larger monthly payments will shorten the time you are paying the loan, therefore reducing the total interest paid out."
Thanks to these end-of-the-year vehicle buying ideas and affordable auto financing, shoppers will be able to find a number of deals this holiday season.