New Car Loan: The Price Is Right

By: Mike Hamel

About 17 million new cars were bought last year. The majority of these purchases required new car loans, with over half being for five years or longer according to the Consumer Bankers Association.

The National Automobile Dealers Association (NADA) estimates the average price of a new car in the U.S. to be $28,400. This makes a new car purchase second only to buying a home as the most expensive financial transaction most Americans ever make.

When it comes to getting a new car loan, the Federal Trade Commission says, “If you decide to finance your car, be aware that the financing obtained by the dealer, even if the dealer contacts lenders on your behalf, may not be the best deal you can get.

Contact lenders directly. Compare the financing they offer you with the financing the dealer offers you.

Because offers vary, shop around for the best deal on a new car loan, comparing the annual percentage rate (APR) and the length of the loan. Don’t just focus on the monthly payment.

Numbers to KnowThe FTC advises consumers to pay attention to these key financial terms when negotiating the price of a new car:

Invoice Price - the manufacturer’s initial charge to the dealer. This usually is higher than the dealer’s final cost because dealers receive rebates, allowances, discounts, and incentive awards.

Base Price - the cost of the car without options. It includes standard equipment and factory warranty. This price is printed on the Monroney sticker.

Monroney Sticker Price (MSRP) - shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufacturer’s transportation charge, and the fuel economy (mileage).

Dealer Sticker Price - gives the Monroney sticker price plus the suggested retail price of dealer-installed options such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

New Car Loan QuoteYou can get a free quote on a new car loan simply by using the express request form at . The site also has more information on .

Auto Finance
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