Getting Finance For A New Truck

Ideally, everybody would pay for a new truck in cash and avoid financing it. Realistically, most of us need a truck to get to our jobs and simply cannot afford paying cash for a reliable car.

On the other hand, while financing a new truck is acceptable, that doesn’t mean you should always buy as much car as possible. What the salesmen tell you can afford and what you should responsibly spend are two different numbers.

When you go finance a truck, you should consider more than the monthly payments – think about the total ownership cost.

The first thing you should understand before going to the dealership is your credit score. While credit card or a mortgage are usually not given to someone with poor credit, you can easily get a truck loan because banks can easily repossess it. And the cost of the loan will be much, much higher.

If you have poor credit, you might get so excited that they gave you a loan at all that you might even forget to negotiate a better rate. Everybody and their mother knows it, and they will take advantage of your situation and profit a lot from you.

While people with a FICO score of 750 or more can enjoy 1.9% rates of even zero, when your credit gets below 650 your loan rates might be as high as 10%.

If you have low credit, it is even more important to shop around and find the best rates possible. You can save money.

Even better: before visiting the dealership, get a financing quote from an online lender. This way, once you get there, you already have a number in your mind that they have to beat. That gives you power to negotiate. Check your local banks and credit unions as well.

If you can, try to get the shortest term possible. While that means you will pay higher monthly amounts, you will also save money on interest. The longer the term is, the more you will end up paying in interest to the bank. You are also much more likely to end up upside down as well.

Make a down payment as well, because that also lowers both your interest rate and the amount of interest paid during your loan.

Also, keep outside your financing all the sales tax, registration and documentation fees, extended warranties, and so on. Rolling these on your financing costs you more money in interest paid as well.