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BUSINESS Monday 17 June 2019
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Car buyers' best cost-saving move: shop for a loan first

By PHILIP REED dition to the negotiated
NerdWallet purchase price of the car,
Associated Press sales tax and fees will in-
With the cost to own a new crease the amount you'll
vehicle rising, it's more im- need to borrow.
portant than ever to con- —DOWN PAYMENT. The
sider what you'll pay for a more you put down, the
car loan and to shop for less you have to borrow,
the best interest rate. saving you money on in-
The average new car loan terest — and it might help
interest rate reached 5.5% qualify you for a better rate.
in 2018, up about one per- —LOAN TERM. Experts rec-
centage point from the ommend 60-month loans
previous year, accord- for new cars and 36 months
ing to Ben Bartosch, J.D. for used vehicles.
Power's manager of fore- 3. DESIGN A LOAN YOU
cast analytics. Meanwhile, CAN AFFORD
a new car purchase price Once you know the inter-
is $33,000, on average, he est rate you qualify for,
says. That means a buyer use a car loan calculator
will pay thousands of dollars to estimate your monthly
in interest on a 60-month payment. Aim to spend
loan. In this May 19, 2019, file photo, a line of unsold 2019 Tucson sports-utility vehicles sits at a Hyundai no more than 10% of your
Indeed, many car owners dealership in Littleton, Colo. take-home pay on your
report feeling stressed by Associated Press loan payment and less
their debt. A recent Harris than 20% for total car ex-
Poll survey of 2,000 Ameri- 1. CHECK YOUR CREDIT able for free from many plications, could save you penses, which also includes
cans for Fair, which pro- If you don't know your personal finance websites, hundreds of dollars. gas, insurance, repairs and
vides cars each month for credit score, you don't banks and credit card issu- "Most people just think of maintenance.
a flat fee, found that 47% know what interest rate you ers. And you can use Annu- going to the dealer to get If you're refinancing, ex-
of people who've had auto could qualify for. Addition- alCreditReport.com to re- a loan," says Sonia Stein- tending your loan term can
loan debt say it's taken ally, if you find a problem quest the free credit reports way, president of auto loan lower your monthly pay-
away some of their peace on your credit report, you you're entitled to every 12 company Outside Finan- ment, but you may pay
of mind. With the shift in can fix it before entering months from the three ma- cial. But, "There's a whole more in interest overall. Use
the loan market, anyone the car-buying process. jor credit bureaus. world of options available an auto loan refinance cal-
looking to buy a car or re- And, if you already have a 2. SHOP AROUND FOR THE to them." She says credit culator to see if you'll save
finance a loan needs smart loan, you may be able to BEST RATE unions offer some of the money by refinancing.
strategies. Here are five refinance into a lower rate The loan-shopping process lowest rates and the best 4. GET PREAPPROVED FOR A
things financial and auto- and payment if your credit should start long before the customer service. CAR LOAN
motive experts say will help is stronger than when you car-buying process, Bar- To compare loan offers, Preapproval can help you
you lock in financing that started the loan. tosch says. Calling around, keep these terms the same: get the most competitive
fits your budget. Your credit score is avail- or submitting online ap- —LOAN AMOUNT. In ad- rate. q

Stocks don't always get a boost when the Fed cuts rates

By ALEX VEIGA and 2007 cycles, which stabilize the economy if the
Associated Press corresponded with major trade war between Wash-
When the Federal Reserve recessions. The market was ington and Beijing starts to
cuts interest rates, or even still down sharply 12 months crimp growth. A majority
hints that it's about to, in- after the Fed began to cut of investors expect a rate
vestors cheer. rates in each of those years. cut at the Fed's July meet-
That's because lowering "Rate cuts haven't always ing, according to the CME
rates stokes the overall led to market recover- Group. If it does, should
economy, which sends ies," said Sam Stovall, chief investors expect the move
stock prices higher — usu- investment strategist at to boost stocks six months
ally, that is. CFRA. from now? Or a replay of
The Fed has initiated 16 rate The Fed is facing pressure the Fed rate cuts over the
cut cycles since World War to cut rates amid signs of past two decades?
II. In 11 of those cycles, the slowing economic growth. Stovall says it's likely that a
stock market was higher six The benefits of the 2017 Fed rate cut this year will In this June 4, 2019, file photo Federal Reserve Chairman Jerome
months later, and was still tax cuts have waned and drive stocks higher, as he Powell speaks at a conference involving its review of its interest-
higher 12-months later in 13 President Donald Trump's doesn't see major parallels rate policy strategy and communications in Chicago.
of them. tariff threats with China now with the economy and Associated Press
Still, sometimes it takes lon- and Mexico have roiled fi- markets in 2001 and 2007.
ger for the gains to materi- nancial markets. That doesn't mean the the damage it could do to Stovall said. "Maybe what
alize. Five times since World Last week, Fed Chair Je- market will necessarily be the global economy and we find is that a rate cut, or
War II, the S&P 500 was rome Powell set off a rally spared more volatility in corporate profits. a series of rate cuts, helps
down six months after the on Wall Street after he sig- coming months, given the "Recessions have not been this bull market last a little bit
start of a Fed rate cut cy- naled that the Fed is willing market's jitters over the U.S.- be repealed, but maybe longer, but it's probably just
cle. That includes the 2001 to cut interest rates to help China trade dispute and they could be postponed," delaying the inevitable."q