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Money for a Car: a Guide to Auto Financing

Nobody wants to be the dumb buyer in a car buying deal. You have to be smart or you end up losing more money than you ought to. It is a very common scheme among car buyers to first get money in order to buy a new car.


The term is called “auto financing” and it simply means how you pay for a vehicle. You can finance a car by taking out an auto loan to own a car, in which case, you have two options: You either use the money from the loan to buy the car, or use it for lease.


If this isn’t your first time buying a car, you might already know that the salesman or your car dealer will be checking your credit report before starting with the negotiations. But this is not the only way you can go to get that new car of yours. The seller will try to sweeten the deal and offer you special car finance situations in exchange for throwing yourself totally at his mercy. That is not a path you have to choose.


The key is preparation. Knowing what auto financing options you have before you get to the dealership will mean that you can take charge of your credit and take charge of your car loan.


Just remember, when you negotiate with the salesman for the most favorable auto loan, nothing is permanent until you have it in writing. So haggle and then haggle some more. Once negotiations seem to be over, that’s when the sales contract is prepared.


Inflated Interest Rates


To have the deal agreed upon by you and the salesman be put in writing in a binding contract is top on the list of the things you must do involving auto financing. Often involved at this part of the procedure is to determine monthly auto loan payments based on an interest rate. Now, as you well know, the interest rate varies from car buyer to car buyer. Your credit is only one of the factors and if the interest rate a car buyer qualifies for is inflated, then the dealership can make extra profit off your loan. That’s just one of the pitfalls in auto financing.


Independent Auto Financing


When you have the approved auto financing option on hand, you can then proceed with the deal as a “cash buyer” so to speak as you already have the cash in hand from the loan and you are just buying the car from the dealer with that money. Car salesmen prefer customers to be “monthly payment” buyers as this makes it easier for them to obscure the total cost of the vehicle, to the detriment of your savings. So wizen up and take that independent auto financing option available.


Set a Price Range


Having a budget is the sensible thing to do. If you set a sensible price range for yourself, then you have less reason to go beyond that range and succumb to the temptation of overspending. If you’re really firm on that budget, no amount of sales talk can sway you. One good tip is to ensure that your monthly car payments and related expenses do not exceed about 20% of your monthly net income.


Discounted Financing vs. Rebate


Here’s the dilemma to car buying: Many dealers offer an option between discounted financing or a rebate, but not both. Discounted financing means that you get zero-percent financing while rebate means that you get a certain amount of cash some time after purchase. The common error many car buyers make is that the zero-percent loan will deliver the most savings. But will it really?


Get the Cash Rebate


In most cases, it’s better to get the cash rebate and apply it against the purchase price of the vehicle. If you already have a pre-approved car loan, then that’s even better because you have positively no need of extra financing from your dealer. Just use your car loan to finance the car and let the rebate handle some of the charges.


You will have to choose how long you want your lease to be and how much you’re willing to pay upfront. The obvious choice, of course, would be to pay as little as possible, but be sure to weigh other options as well. After that, the car is yours for the period stipulated in the lease contract.


There are several other different plans those car buyers like you can adopt in order to make the most out of your money and reduce costs at the dealership. Understanding the credit process is just one way of being a smart buyer.


For more information on auto financing and car loans, visit:

http://www.financeguide101.com/finance-reports/money-for-a-car-a-guide-to-auto-financing.html

About the Author

Get more information on how to get auto financing to own your dream car, and scams to avoid in dealing with car dealers. Visit Auto Financing and Car Loans

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Insurance Companies Oppose International Financial Reporting Standards (IFRS)

Canadian life insurance companies are persuading the Canadian government and regulatory bodies to move the accounting principles and reporting requirements in their favour. In summary, the industry would like an amendment of International Financial Reporting Standards which Canadian government is prepared to put in use but plans to effect not before 2013.

They argue that the new order will prepare way for tremendous volatility to the c/e ratio in annual (quarterly) comparisons. The problem is, not only would this make the comparisons more problematic, but it would also stop comparisons to results calculated under the former rules.

LSM Insurance believes the latter is weedy plea though, as the the industry would most likely be needed to make new calculations for previous few periods' statements using the fresh rules precisely for the purposes of logical benchmark, as is the case with most alternations of the standards. However, a shift of regulations will absolutely come with more administrative power costs in the time of the change at the bottom end.

As to the volatility of capital figures, the FP says that the the industry are requiring a two-tier accounting system that lets capital to be assessed based on a various set of rules than the IFRS. This does make sense because the amounts of capital reserves are surveyed and regulated by the Canadian regulatory body - OSFI. Should there be over the limit volatility of capital, the insurance companies may be force to re-check them more often so that foil optimal capital management.

In extreme cases, insufficient capital may prompt OSFI to consider an insurer bankrupt. Now, it is far from possible to determine the exact effects of IFRS on c/e volatility, as the new regulations are still being prepared by the International Accounting Standards Board (IASB). Nevertheless, the insurance companies are believing that a two-tier rules, which is in place in the US and the UK will erase any such concerns.

About the Author

Prepared by Lorne Marr, an independent insurance broker from Toronto. His firm, LSM Insurance, deals with insurers such as Manulife Financial Life Insurance and AXA Life Insurance.

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