Christian New Auto Financing
Learning how Christian new auto financing works is beneficial in choosing a loan that works out well an individual's personal financial profile, rather than damage it by overburdening them with unnecessary fees, high interest rates or atrociously high monthly car payments. Understanding how car dealers make money will also increase the car buyer's awareness of the industry and ability to find the best loan suitable for his financial needs. Properly researching new auto financing is even more important than studying used car loans, because a new care loses the initial value quickly, and the wrong loan could make this an even more devastating loss.
Car salesmen make money two ways. The first way is the actual profit from the sell of the automobile. The dealer sells the car for more money than he bought it for. The difference between the two prices is the profit he makes from the sell. The second way that an automobile dealer makes money is through financing the loans for the cars. The profit from financing is generated through higher than standard interest rates. These loans are offered by the dealership itself. The credit department in a car dealership is usually more lenient in who it finances than banks and credit unions are. Therefore, the person with a less than perfect financial background may benefit from dealer loans. However, typically dealer loans do not offer as competitive of interest rates as bank loans do. For this reason, a person with fairly good credit would benefit from seeking a loan through a standard lending institution. During new auto financing, the purchaser will also be offered some additional options for their car.
The credit department of the dealership usually offers its employees commission incentives to sell options like: extended warranties, an alarm system for the vehicle and undercoating for the chassis of the car. A savvy car buyer will avoid these pitfalls of the new auto financing procedure. After agreeing on an acceptable price for the car with the sales person, a prospective vehicle purchaser needs to be aware of the additional costs that the sales person will likely suggest. If an extended warranty or an alarm system is truly what the car buyer wants, then he or she needs to factor that into the amount they agree upon for the car. There are many reasons why it is often more prudent to choose new auto financing through a third party vendor, rather than the car dealership. One of the reasons has already been discussed.
Because banks and standard lenders don't have as much to profit from a specific loan, they tend to offer more competitive interest rates. It is also a good idea for an individual to expand his or her financial portfolio. Not only can the car owner now list that she has successfully qualified for a new car, but the bank or lending institution is now a second reference for her reliability in making payments. In addition to these advantages in choosing standard lenders for new auto financing, the banks and credit unions have no vested interest in the additional offerings of the car dealership. Bank employees do not work on commission, like the sales personnel at the dealership. A loan officer at a bank will not press a customer to buy an extended warranty or an alarm system. The average employee in the credit department at the local car dealership, however, works on commission and thus will try to "up sell" the client on other merchandise or services.
Outside of dealerships and banks, a person purchasing a car still has other options for paying for the vehicle. Searching online and throughout the community for no credit check finance institutions is a viable option for someone with tarnished credit. If the credit is quite damaged, the purchaser may want to consider buying a used vehicle to build credit before moving on to a new car. If there are just a few late payments and similar small blemishes, seeking a non-standard lender will still probably make buying a new car a possibility for the prospective buyer.
If the person buying the vehicle is a home owner, an equity loan is still an option. The benefit to new auto financing through a line of equity is that the interest rates tend to be significantly lower than standard car loan rates. There are usually negative aspects to all things. Drawing a loan from the equity in a home forever links that car with the home. Should the car owner lose her job and not be able to pay all of the bills, she may not want to lose both her car and her home for a few missed payments. Extreme caution should always be taken when borrowing money against home equity.
Seeking help through friends and relatives is also another way to find enough money to buy a new car. Relatives seldom charge interest, so this is obviously the cheapest type of new auto financing. "Speak now in the ears of the people, and let every man borrow of his neighbour, and every woman of her neighbour, jewels of silver, and jewels of gold." (Exodus 11:20) In addition, a friend or relative may not hold the borrower to stringent monthly expectations. So, if a monthly payment is missed, the borrower's mother is unlikely to send a notice of late payment to her son's apartment. Reciprocally, it is ill-advised to borrow from friends and family, as the best intentions do not always pan out. Even if the borrower has every intention of paying back the loan, the future is uncertain. If a car buyer fails to pay back the dealership or bank, he will lose his car. If he fails to pay his friend, he may lose a loved one and confidante.
Online Auto Christian FinancingNo doubt the local banks despise the online auto financing business that is booming, in spite of the tough economic times for so many people. If a potential buyer calls a bank that perhaps he or she has done business with for many years to apply for a vehicle loan, often the surprise is waiting of higher interest rates and more demanded for a down payment than the online auto financing companies require. One of the most interesting and helpful features of the online loan brokers is the willingness to have various banks compete for a car loan on the buyer's behalf. Now it is true that online shopping now enables anyone to compare the rates that local banks are charging for auto loans and the down payment requirements, but the car loan brokers are actually encouraging banks and finance companies to vigorously go after the customer, knowing that each company will be compared to others on the computer screen. One thing is for certain: the American economy is based mainly on the car ownership business and there are a plethora of companies ready to loan even the most credit challenged the opportunity to buy a new or used car.
When a person begins looking for online auto financing, there are some things of which to be aware. Just like predatory lenders have preyed upon the uneducated home buyer, many unsuspecting car buyers have been caught in similar auto loan Venus flytraps. There are three main avenues for securing a car loan in today's auto marketplace. The first is through the dealership and all the major car manufacturers offer loan programs for potential customers. Car dealers are quick to promise that anyone can receive credit and invite any and all to apply even over the phone before coming to a dealer showroom. Once a customer enters into the arena of car dealing however, a lot of things can go wrong for the consumer such as taking a much higher rate of interest on the loan than was promised in the beginning, especially if the credit score is very poor. Extra loan fees and handling charges can be place on the loan without much fanfare and can easily slip by the customer who is very much in love with the car.
A second way of financing an automobile is through a local bank. If a customer decides on a car and then visits his/her bank, the customer may find a much more businesslike approach to getting a loan as opposed to the circus like atmosphere of many car dealers. Banks are much more careful about who receives a carve loan, and yet the chance to secure a lower interest loan could be possible. Surprisingly, new car loans often have lower interest rates than used car loans. "For we must all appear before the judgment seat of Christ; that every one may receive the things done in his body, according to that he hath done, whether it be good or bad." (II Corinthians 5:10)
The third way to secure a car loan is through online auto financing, of which there are many companies offering the service. Of course, the biggest reason for getting online auto financing is lower interest rates, sometime a full three percent below bank rates. Even some of the country's most well known banks offer these lower rates, but there are some caveats along the way to deal with. In order to get really good interest rates from these sources, a customer must agree to have monthly payments withdrawn automatically from his/her bank account. Even applying by phone, fax or mail will up the interest rate and if no agreement is made about automatic payments, more interest is tacked on.
A number of red flags ought to be raised if the application for online auto financing only takes a couple of minutes including the approval. The short application time may signal that the Christian company is not that careful about giving out loans, so to cover for the inevitable slackers, these Internet loan companies may add on a number of extra fees to cover their losses. There is enough uneven ground when the topic is online auto financing and so the very best advice for any customer is to back off the car deal for a few days and really investigate all the possibilities, remembering that those with better credit scores get better interest rates. In fact, many experts suggest that shopping for an auto loan ought to come before any shopping experience. The temptation is to fall in love with a car no matter how much it costs. The more prudent action is to get a loan a person is comfortable with first, and then find a car within that price range.
There is nothing like being approved. Whether considering a bank or car dealership or online auto financing, being told that someone else considers a person worthy of getting more money can be a heady thing. In some cases, people can take a loan approval as a sign that the car should be purchased, no matter how tight the budget may become. We tend to shy away from those who want to tell us the cold hard facts because those facts might tend to mess up our plans. "Tell me a half truth with lots of sugar on it" could be the motto for many. When Jesus said that the road to heaven is narrow and few people find it, lots of arguments get started because it sounds exclusivist. But remember that Jesus is providing salvation to those who want it, not selling car loans.