Sunday, June 10, 2012

3 Tips about Securing Car Loans for Pensioners

Car loans for pensioners may present some challenges. Pensioners may have fixed incomes. They are very often no longer in the workforce. However, these circumstances may not always be disadvantages. Many lenders realize that pensioners could be better risks. Pensions usually are lifetime benefits. Pensioners are no longer subject to layoffs and terminations, and some receive cost-of-living adjustments even when workers are not receiving raises. Therefore, many pensioners have more options than they realize. The key to making a good choice is to consider all the available options. Here are some tips that can assist a pensioner in making a wise choice.


1. AVOID THE DEALERSHIP

The dealership is rarely the best option for securing a loan. Many choose the dealership because it is convenient. The entire transaction can be easily handled in one place. Your loan can be approved in minutes. The salesperson may also pressure you. However, keep in mind that the salesperson is concerned about ensuring that the deal is made. If the loan is financed at the dealership, the salesperson can be assured the transaction is complete. However, your concern is to get the best deal. You may pay a price for convenience in the form of a less attractive rate. Many people simply finance at the dealership without shopping for rates. Therefore, dealerships have less competitive pressure to offer the best rates.

2. SHOP FOR RATES

In the Internet age, it is easier than ever to comparison shop. There are sites where you will find all of the current rates offered by lenders in your area. Also, there are online calculators on most of these sites that allow you to compare payments for various loan amounts and terms. When you find the best rate, contact the bank or credit union where you maintain your accounts. Many will match the best rates for long-term customers. Take advantage of any long-term relationship you currently have with a financial institution. 

3. CONSIDER ALL OF YOUR OPTIONS

An advantage that many pensioners have is more choices. Younger borrowers often have less credit history. However, many pensioners have long track records with a variety of lenders. Consider all of your choices, including home equity lines. These loans often have the advantage of attractive rates and tax-deductible interest. A home equity line of credit can be a good choice if you have the discipline to pay the loan off in a few years. This is a bad choice if you spread payments over an extended period. Keep in mind that home equity loans are secured by your house. However, if you have financial reserves, the risk you are taking is not unreasonable. Also, don't overlook Internet banks. You give up the face-to-face contact; however, the savings can be worth the sacrifice of not having personal contact. When you initiate the contact over the Internet, you can have less concern about security than if a company claiming to be a lender initiated contact with you. Your information will be secure as long as you do business with large established companies with outstanding reputations.

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