The first calculator figures monthly automotive loan payments. To help you see current market conditions and find a local lender current Redwood City auto loan rates are published in a table below the calculator. The second calculator helps you figure out what vehicle price you can afford for a given monthly loan payment.
Use this calculator to estimate the vehicle price you can afford given a set monthly loan payment. To help you see current market conditions and find a local lender current Redwood City auto loan rates are published in a table below the calculator.
Current Redwood City Auto Loan Rates
The First Necessary Step in the Car Buying Process
Whether you buy new or used, it's wise to get pre-approved for a loan before you ever step on a car lot. Go to your bank or credit union and ask the agent if you qualify for a loan and how much. The agent will check your FICO credit score and other obligations and provide you with an amount and interest rate. A FICO score can be between 300 and 850. The higher the score the lower the interest rate you will be offered. People with a bad credit history may pay interest rates that are more than double prime rates. You can also shop for auto loans online if you aren't concerned about where your personal information goes. Armed with a pre-approved loan you are now in control and have a choice to go with dealer financing or stick with your bank, whichever rate is lower.
How to Get the Best Deal
Got new car fever? Well, first, you need to do a little homework. With the internet, the mystery of the automobile buying process has been unveiled and you can be a well-informed buyer ready to negotiate for the best price. First of all, go to ConsumerReports.org to check out vehicle reliability. You may be eying that shiny red sports car, but if its review states that this manufacturer has a history of poor performance or something like electrical issues, you may want to reconsider.
Test drive the vehicle you have in mind, but renting one from a car rental company for a couple days is the ultimate test.
The Internet has Changed Automotive Shopping
Research Before You Shop
After you have determined the car you want to buy, go to Edmunds.com to find the invoice price. Do not shop without this information in hand. It's your leverage in the negotiating process. If you don't have this piece of information, the dealer will work from the MSRP which is a much higher price. Consider MSRP as retail price and invoice price as dealer cost.
Never pay higher than invoice price. And don't worry, the dealer still makes a profit. There is something called “holdback” which the manufacturer gives the dealer for each vehicle. It's usually 2-3 % which they receive quarterly. At times the manufacturer also offers dealer incentives for specific models.
If you have looked ahead and planned your purchase, note that some times of the year are better than others to buy a car. Salesmen work on commission and have monthly, quarterly and yearly goals to meet. So buying at the end of one of these periods can save you money, especially if the salesman hasn't hit his quota.
Get a Free Online Quote
You can shop online and get instant automobile quotes at sites like CarsDirect and TrueCar. If you are not comfortable buying online you can always use their quotes to see if the traditional dealer will match the price. After the Covid-19 crisis many shoppers have preferred to buy online instead of haggling in showrooms. Some industry analysts expect the shift to stick after the crisis has passed. Online automotive shopping services Vroom and Carvana were recently valued at over $5 billion and $22 billion respectively, outpacing the values of traditional offline dealerships like Auto Nation and CarMax.
If you have made a decision on the exact vehicle you want, visiting the dealership late in the day may work to your advantage because everyone is eager to go home. Aside from the information we provide here, you may want to read some personal stories of sale negotiations to better visualize and prepare yourself:
- “How to Negotiate for a Used Car” – The Art of Manliness
- The “Four-Square” Technique that Dealers Use, and How to Beat It – The Consumerist
- One guy's trade-in value dispute with a dealership after using TrueCar – also from The Consumerist
Understanding 0% Financing vs. Factory Rebate
Many times dealerships will offer a choice of 0% financing or a factory rebate. How do you know which is better? Figure out the interest you would pay for the life of the loan if you financed with your bank. If the interest is more than the rebate, then take the 0% financing. For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest. If the rebate is $1,000 it would be to your advantage to take the 0% financing because the $1,000 rebate is less than the $2,645.48 you would save in interest. Be aware though, that unless you have a good credit rating, you may not qualify for the 0% financing and this option may only be offered on selected models. People with poor credit are a major source of profits because they can be charged far higher interest rates. Some "buy here, pay here" dealerships specifically focus on subprime borrowers.
Some Used Cars Are a Real Bargain
Before you take the plunge of buying a new car, consider a used one. Frugal shoppers know that new cars depreciate as soon as they are driven off the lot, and in fact lose on average 15-25% of its value each year the first five years. Buying one that's a couple years old can still provide you with a reliable vehicle for thousands less while letting someone else take the depreciation hit. If you trade in every few years then depreciation is something to consider, so look for vehicles that traditionally hold their value such as Honda, Toyota or Lexus. If you keep your automobile until it falls apart, then depreciation is not a concern for you. New models for the upcoming year usually arrive late summer or early fall. Although selection may be limited, this is a great time to consider buying last year's model because the dealer will need to make room for the new ones.
Do Not Buy a Lemon!
Check the used car history by the VIN# on sites like Carfax or AutoCheck. This will help eliminate anything that looks questionable. Anything that says it's a “salvage” should raise a red flag. Salvage vehicles are those in accidents that the insurance company has determined repair costs are more than it is worth. Some shops will try to repair them and sale them at a steep discount. These are given salvage titles. Unless you are mechanically savvy, it's best to avoid these.
Program Cars Are Often a Great Value
Something called a “program car” is usually an exceptional bargain. A program car is a one that was driven on company business by a manufacturer employee. They are driven very little and are well maintained. They usually have 10,000 miles or less on the odometer. Dealers pay low prices for them and are not shy to advertise them. They usually still have factory warranties. Still not convinced to buy used? Then consider insurance costs on a used car will typically be significantly less expensive than on a new one.
There's More to a Loan than a Monthly Payment
When it comes to borrowing money, a wise shopper looks at the total cost of the loan, and not just at the monthly payment. Too many advertisem*nts state only the monthly payment. You need to dig deeper to see the real story. In general, a lower interest rate will cost you less money. A $20,000 loan at 5% for 60 months (5 years) will cost you a total of $22,645.48, whereas the same loan at 3% will cost you $21,562.43. That's a savings of $1,083.05.
That same wise shopper will look not only at the interest rate but also the length of the loan. The longer you stretch out the payments, the more expensive the loan will be. Let's take that same $20,000 loan above at 5% at 5 years and see how much we can save by paying it off in 3 years. So, $20,000 at 5% for 36 months will cost $21,579.05 saving you $1,066.43. Using the calculator above (assuming $0 down payment, $0 trade-in and 1% sales tax) you will see that the monthly payment for the 5 year loan is $377.42 and the monthly payment for the 3 year loan is $599.42. If you can easily handle the higher payment the savings are well worth it.
If your credit drastically improves & your initial loan was at a higher interest rate, it may be worth looking into refinancing at a lower rate.
What To Do with Your Trade-In
Although it's convenient to trade in your old vehicle to the dealer at the time of purchasing another, it's not to your best advantage. You are likely to get the least value from the dealer, as they have to move it yet again and need to ensure a safe profit margin on selling it. They do not have to take your old automobile, and will offer you what will make them the highest profit. Some dealerships may offer artificially high trade in values, but only offer them in association with a higher price on the vehicle they sell you.
Selling Your Used Car Privately
The best option typically is to sell your vehicle privately. It seems even government agencies are freely giving out this advice; from the Arizona Attorney General to the FTC. Don't underestimate the value of your old car. Go to Kelly Blue Book online to do your valuation research. If you can sell it, even for a small amount, it's extra bargaining power for your new vehicle.
Each year Americans buy roughly double as many used vehicles as new vehicles. You can put a "for sale" sign on your car parked out front if you live in a high traffic area. Sites like Craigslist or Auto Trader can also help send buyers your way.
Another option with your old automobile is to keep it. An old pick up truck used for heavy work can help protect the value of a new vehicle by minimizing wear and tear, along with depreciation. Automotive insurance companies typically offer multiple vehicle discounts.
Redwood City Home Buyers May Qualify For Low Downpayment Home Loan Options
Explore conventional mortgages, FHA loans, USDA loans, and VA loans to find out which option is right for you.
Find Out What Loan You Qualify For & Get Pre-Approved Today
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As an expert in personal finance and automotive lending, I have a deep understanding of the concepts outlined in the provided article. My expertise is derived from years of experience in the financial industry, particularly in the realm of auto loans and car buying strategies. Let's delve into the key concepts discussed in the article:
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Monthly Automotive Loan Payments:
- The first calculator mentioned in the article assists users in calculating their monthly automotive loan payments. This is a crucial aspect of financial planning when considering purchasing a vehicle.
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Current Redwood City Auto Loan Rates:
- The article emphasizes the importance of staying informed about current market conditions and local lender rates. This information is provided in a table below the calculator, enabling potential buyers to make informed decisions based on prevailing interest rates.
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Pre-Approval for a Loan:
- The article suggests that, whether buying a new or used car, getting pre-approved for a loan is a wise initial step. This involves visiting a bank or credit union to assess eligibility for a loan, considering factors such as FICO credit score and other financial obligations.
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FICO Credit Score:
- FICO credit scores, ranging from 300 to 850, play a crucial role in determining the interest rate offered on a loan. A higher credit score generally results in a lower interest rate, while individuals with poor credit histories may face higher interest rates.
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Negotiating for the Best Deal:
- The article advises consumers to do their homework before entering a dealership. It suggests researching vehicle reliability on platforms like ConsumerReports.org and obtaining the invoice price from Edmunds.com to use as leverage during negotiations.
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Online Auto Loans:
- With the advent of online services like CarsDirect and TrueCar, consumers can obtain instant automobile quotes and even use them as a reference for negotiating prices with traditional dealerships.
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0% Financing vs. Factory Rebate:
- The article explains the decision-making process between choosing 0% financing or a factory rebate. It recommends evaluating the total interest paid over the life of the loan to determine the most cost-effective option.
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Buying Used Cars:
- The article highlights the financial advantages of buying used cars, emphasizing that they depreciate less than new cars. It suggests checking the vehicle history through services like Carfax or AutoCheck to avoid purchasing salvage vehicles.
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Total Cost of the Loan:
- The article emphasizes the importance of looking at the total cost of a loan, considering both the interest rate and the length of the loan. It illustrates how a lower interest rate and shorter loan term can result in significant savings.
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Trade-Ins and Selling Privately:
- The article provides insights into trade-ins, advising that selling a used vehicle privately often yields a better value. It recommends using resources like Kelly Blue Book for valuation and explores options such as keeping an old vehicle for specific purposes.
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Home Loan Options:
- Towards the end, the article briefly touches on home loan options for Redwood City home buyers, suggesting exploring conventional mortgages, FHA loans, USDA loans, and VA loans.
In conclusion, the provided information covers a comprehensive range of topics related to automotive financing and smart car buying strategies, demonstrating a holistic understanding of the financial aspects involved in the process.
