You've found your Ford Escort - the one that is really right for you. Now to move towards completing the purchase, you are searching for financing.
If you are like most people, you do not have a few thousand dollars in the bank to pay cash for a car. But you may have a up to a thousand dollars from the potential sale of the car you are driving to put down on the Ford Escort you want to purchase. The rest of the money you will most likely have to borrow from a bank or credit union.
Securing the right financing for your Ford Escort can save you hundreds of dollars. The difference between paying 6.5% for a three-year loan and 6.85% for a five-year loan can be $30 or $40 a month, depending on how much you borrow. So keeping your interest rate low is a very good game to play.
Having your financial records in order before applying for credit is a smart move. If you do, you are going into the transaction in the best possible way. Here are a few things you can do.
Pull up your credit report. (You can order a report from any of the credit reporting agencies online for a small fee.) Clear up any mistakes once you have received and reviewed the report. Clear up any outstanding debts. Find out your credit score.
If you do not have perfect credit, you can still obtain a loan for your Ford Escort, although you will most likely pay a higher interest rate.
Since there are no new Ford Escorts, you are forced to pay used car loan interest rates. These rates are always higher than new car rates. Shop around, shop around, shop around. Check your local banks and credit unions. If you are buying from a used car dealer, find out what their rates are. Trust only reputable lenders. And ask if there are pre-payoff penalties. You do not want to be charged extra if you pay off your loan sooner than the original loan period.
The longer you take to pay back the loan, the higher the interest rate you will pay. Conversely, if you can pay off your loan in a year or two, you will pay a lower rate. Typical rates when purchasing your Ford Escort through a new or used car dealer are 6.5/% for three years, 6.85% for five years and 7.39% for a six-year loan. Person-to-person loans (when buying from a private party) are 8.25% for three years, 8.45% for five years and 9.25% for a six-year loan.
Before you apply for loan, you can go to the institution's website and find out what interest rates they are offering. You can also calculate your loan payments keying in the rate you want to pay, the loan amount, and for how long you want to borrow the money.
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