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 So how will your effort for learning about good credit pay off? You will save money on the largest purchases. We will explain how to save money on a car loan.
Let's say you have a car picked out and you have just graduated from school. Lets say it costs $12,000. Most people concentrate on negotiating with the car dealer on price but forget to shop for the financing. Sometimes cheaper financing can be found outside of the dealership. In fact, you'd be surprised at how much interest rates vary. Usually interest rates are listed in your local
newspaper.
We took a copy of a local paper and compared rates. Here's how they look:
| |
Bank #1 |
Bank #2 |
Bank #3 |
Bank #4 |
| Interest |
12.5% |
9.10% |
8.25% |
6.75% |
| Term |
60 |
60 |
60 |
60 |
| Payment |
$269.98 |
$249.98 |
$244.76 |
$236.20 |
Car loans compared: Case study $12,000 automobile with different interest rates.
When you ask a recent car buyer how many dealerships they went to before they purchased their car, they'll tell you of horror stories about the multitude of dealerships they visited. BUT, ask them of how many places they visited for financing and you get a puzzled look. Why?! People don't think that financing can be shopped for or even negotiated with and haggled
down!
Pretty neat huh? It's mind boggling the amount of money that you can save. Mortgages hold even more potential for savings because the principal is larger and the term is longer. You can use a payment calculator as we did for the car loan example to compare. Good luck.
The law helps you avoid the typical pitfalls students fall into. See our
pitfalls section
for more examples.
Take a Look at our Top Ten Credit Tips |