New or Used Trucks and Financing
Posted by Jason Krasinskas on Thu, Mar 24, 2011
Choose between buying a new truck and buying a used truck. A new truck will come with a longer warranty and no history of service. It will cost more, other things being equal. On the other hand, new trucks depreciate (lose value) almost immediately when they leave the new truck lot...which means that if you can find a well cared-for used truck, it might be a good bargain.
Consider the price of the truck. This sounds obvious, but truck dealers, new or used, may tempt you with a low monthly payment. You should be sure to look at the price of the truck, everything included. The amount of the monthly payment depends on the price of the truck as well as the terms of the financing. A low monthly payment may be tempting, but it is not necessarily a good deal. Suppose the truck is over-priced, the interest is too high, and the loan is stretched out over too many years? That could be just about the worst possible deal!
You will have to sign a purchase contract. The contract protects you as well as the dealer, so do not skip this step or hurry through it.
If you are financing the used truck, make sure you understand:
how much you will pay and how often;
how many payments you must make in total;
how much you will have paid in total;
what the annual interest rate is.
Remember that the lowest possible monthly payment is not necessarily the best deal. If the interest is high and the term of the loan is quite long, you could end up parting with a lot more money in the long run. But it is certainly important to have an affordable monthly payment, because if you can't make it every month, you could lose your used truck and all the money you have already invested in it.
Don't just assume you will finance through the dealer. Check with your bank or credit union to see if the offer is as good. Even if you end up back with the dealer, by shopping around you may be able to negotiate a better deal.