New Car Loan: The Price Is Right

The Landscape of New Car Purchases

In the past year, approximately 17 million new cars were purchased in the United States. A significant portion of these transactions involved new car loans, with over half of these loans extending for five years or more, according to the Consumer Bankers Association (source).

The National Automobile Dealers Association (NADA) reports that the average price of a new car in the U.S. is around $28,400. This makes buying a new car the second most expensive financial decision for most Americans, trailing only behind purchasing a home (source).

Financing Your New Car

When it comes to financing a new car, the Federal Trade Commission (FTC) advises consumers to be cautious. The financing options provided by the dealer may not always be the best available. The FTC recommends contacting lenders directly and comparing their offers with those from the dealer (source).

Key Financial Terms to Understand

To make an informed decision, it's essential to understand the following financial terms:

• Invoice Price: This is the manufacturer's initial charge to the dealer. It is typically higher than the dealer's final cost due to rebates, allowances, discounts, and incentive awards.
• Base Price: The cost of the car without any options. It includes standard equipment and the factory warranty. This price is printed on the Monroney sticker.
• Monroney Sticker Price (MSRP): This sticker shows the base price, the manufacturer's installed options with the suggested retail price, the manufacturer's transportation charge, and the fuel economy (mileage).
• Dealer Sticker Price: This includes the Monroney sticker price plus the suggested retail price of dealer-installed options such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

The Importance of APR and Loan Term

When shopping for a new car loan, it's essential to compare the annual percentage rate (APR) and the length of the loan. Focusing solely on the monthly payment can be misleading. A lower monthly payment might result from a longer loan term, which could mean paying more in interest over time.

Interesting Stats

• Average Loan Term: The average loan term for a new car in the U.S. is now around 69 months (source).
• Interest Rates: As of 2023, the average interest rate for a new car loan is approximately 4.21% for borrowers with excellent credit (source).
• Loan Amounts: The average amount financed for a new car is about $35,000 (source).

Getting a New Car Loan Quote

You can obtain a free quote on a new car loan by using the express request form at 1-800-Bar-None. This site also provides more information on new car loans.

Conclusion

When negotiating a new car loan, it's essential to consider the total cost, including the APR and loan term, rather than just the monthly payment. By understanding key financial terms and shopping around for the best deal, you can make a more informed decision and potentially save a significant amount of money.

This article provides a comprehensive overview of the factors to consider when negotiating a new car loan. By understanding the nuances of car financing, you can make a more informed decision and secure the best possible deal.