Get access to the same vehicle valuation tool that dealers rely on. With Black Book, you’ll have insider data to accurately assess trade-in and purchase values—empowering you to negotiate the best possible deal.
The U.S. Treasury Department has announced new electric vehicle tax credit sourcing rules that will take effect in April, aiming to incentivize domestic production and reduce reliance on foreign supply chains. The new rules will remove full eligibility for several popular EVs. These amendments come months after the IRS issued preliminary EV tax credit rules. Here’s the latest from the federal government.
New EV Tax Credit Guidance
Starting April 18th, the $7,500 tax credit for new EVs will be split into two parts for qualifying vehicles and buyers. The new rules include:
Half of the credit will be based on meeting escalating requirements for battery components to come from North America.
The other half will be based on critical minerals coming from the U.S. or its free-trade partners.
By 2027, 80% of the value of a battery’s critical minerals will need to be extracted or processed in the U.S. or a country with a free-trade agreement in effect.
By 2029, 100% of the value of battery components will need to be made or assembled in North America.
A three-step process for determining the percentage of the value of the critical minerals in a battery.
A four-step process for determining the value of the battery components manufactured or assembled in North America.
Criteria identifying which nations that produce critical minerals have free-trade agreements with the U.S.
Starting in 2024, vehicles are ineligible if they contain any battery components manufactured by a “foreign entity of concern,” which could include companies controlled by China. That exclusion starts in 2025 for critical minerals.
Newly negotiated critical mineral agreements, such as the U.S.-Japan trade deal on EV battery minerals, will qualify. Other qualifying countries include Australia, Canada, Chile, Korea, and Mexico. This is huge news for fans of Hyundai and Kia EVs. The European Union is also in negotiations with the U.S. on a battery critical minerals deal.
How Battery and Mineral Sourcing Is Determined
Here’s a look at the proposed three-step process for determining the percentage of the value of the critical minerals in a battery that contribute toward meeting critical minerals requirement: 1) determine procurement chains, 2) identify qualifying critical minerals, and 3) calculate qualifying critical mineral content.
The U.S Treasury department also proposes a four-step process for determining the value and sourcing of batteries: 1) identify battery components that are manufactured or assembled in North America, 2) determine the incremental value of each battery component, including North American battery components, 3) determine the total incremental value of battery components, and 4) calculate the qualifying battery component content by dividing the total incremental value of North American battery components by the total incremental value of all battery components. Sound complicated? What else would you expect from government guidance. Check out the official press release here.
Eligible Vehicles List
Starting April 18, 2023, new electric vehicles placed in service will need to adhere to the critical mineral and battery component requirements specified in the U.S. Treasury Department’s rule. To assist buyers, FuelEconomy.gov will provide a comprehensive list of eligible clean vehicles on that date. This list, submitted by qualified manufacturers to the IRS, will detail the vehicles meeting the new clean vehicle credit requirements, including the exact amount of the credit they are eligible for.
While the new EV tax credit sourcing rules aim to promote domestic EV supply chains and job creation, China still dominates the processing and refining of key battery minerals. The U.S. is working to build secure supply chains for critical minerals and focusing on domestic sourcing and production. However, EV incentives could be eliminated, at least partially, for several popular electric vehicles. Check back for the updated eligible vehicles list once it is made public on April 18, 2023.
Navigating the world of car loans can be daunting, but understanding how interest rates work is key to making a wise investment in your new or used vehicle. By learning how to save on car loan interest, you can potentially save thousands of dollars over the life of your loan. In this guide, we’ll explore expert tips for securing the best interest rates when buying both new and used cars. Already bought your car? We’ll dive into refinancing options too.
Saving on Car Loan Interest When Buying a New Or Used Car
Boost Your Credit Score
Your credit score plays a major role in determining the interest rate you’ll receive on a car loan. Lenders use credit scores to assess the risk associated with lending money, and a higher score often results in lower interest rates. Before shopping for a new car, check your credit score and work on improving it. Paying off outstanding debts, making timely payments, and keeping your credit utilization low can all help boost your score.
Shop Around for Financing
Don’t limit yourself to the dealership’s financing options. Shop around for car loans from banks, credit unions, and online lenders to find the best interest rates. Get pre-approved for loans from multiple lenders and compare the terms, fees, and interest rates to secure the best deal. Don’t forget to get a free quote with CarEdge-approved credit unions. Even if you decide to finance elsewhere, you can use our low rates as leverage when negotiating.
Opt for a Shorter Loan Term
While a longer loan term may result in lower monthly payments, it also means you’ll pay more interest over the life of the loan. Opting for a shorter loan term can save you money in the long run by reducing the total interest paid. Keep in mind that this will result in higher monthly payments, so ensure it fits within your budget.
Loan Amount
Interest Rate
Loan Term
Monthly Payment
Total Interest Paid
$25,000
4%
36 mo
$738.01
$2,568.36
$25,000
4%
60 mo
$460.59
$4,635.40
Make a Larger Down Payment
A larger down payment can help you save on interest by reducing the loan amount and demonstrating to lenders that you’re financially responsible. Aim for a down payment of at least 20% of the car’s purchase price to minimize the interest costs and potentially qualify for a lower rate.
Ask About Large Loan Discounts
A large loan discount in the auto financing world refers to a reduction in interest rates or fees offered by a lender when a borrower takes out a car loan that exceeds a certain threshold. This practice is based on the principle that larger loans usually involve more significant risks for the lender, and the reduced interest rate or fees help to incentivize borrowers to choose that particular lender for their car financing needs.
Ask About Qualifying For a Tier Bump
Tier bumps in auto loans are a practice employed by some lenders to offer a more favorable interest rate to borrowers who may be on the cusp of qualifying for a better tier or category. Essentially, the lender “bumps” the borrower up to a higher tier, which comes with a lower interest rate, despite their credit score or financial profile not quite meeting the standard criteria for that tier. This practice can be particularly beneficial for car buyers who have borderline credit scores or are working on improving their financial situation.
LTV Discounts
Loan-to-value (LTV) ratio is an essential factor that lenders consider when determining interest rates for auto loans. The LTV ratio is the amount of the loan compared to the market value of the vehicle being financed. A higher LTV ratio typically indicates a higher risk for the lender, as it means they are financing a larger percentage of the vehicle’s value. In such cases, lenders may charge a higher interest rate to compensate for the increased risk. To secure a lower interest rate on an auto loan, aim for a lower LTV ratio by making a larger down payment or opting for a vehicle with a lower price tag.
Consider Manufacturer Incentives
Automakers often offer special financing deals or cash rebates to encourage new car sales. Keep an eye out for manufacturer incentives, such as low or 0% APR financing, which can significantly reduce your overall interest costs. Be sure to read the fine print and weigh the pros and cons of these offers before deciding. To make the most of your car loan interest savings, check out our guide on the best auto loan rates and learn how to secure the most favorable financing deals.
Look for Certified Pre-Owned Vehicles
Certified Pre-Owned (CPO) vehicles are a great option for used car buyers seeking lower interest rates. These vehicles undergo rigorous inspections and often come with extended warranties, making them a lower-risk option for lenders. As a result, CPO vehicles typically qualify for lower interest rates compared to non-certified used cars.
If you already have a car loan with a high interest rate, consider refinancing to save on interest costs. Refinancing involves taking out a new loan to pay off your existing loan, ideally with a lower interest rate. This can be a smart move if your credit score has improved since you initially took out the loan or if interest rates have dropped.
Leverage Your Trade-In
When buying a used car, use your trade-in as leverage to negotiate a better interest rate. Dealerships often make more profit from used car sales, so they may be more willing to offer lower interest rates to secure the deal. Research the value of your trade-in before negotiating to maximize its impact on your loan terms. Be sure to check the Black Book valuation of your trade-in with CarEdge Insights. Finally, you have access to the same car value data that dealers use!
Dealerships may add a markup to the interest rate they offer on car loans, pocketing the difference as profit. Be aware of this practice and ask for a direct quote from the lender to ensure you’re getting the most competitive rate possible. If you have multiple loan pre-approvals, you can use them as leverage to negotiate the best rate with the dealer.
If your car loan allows for early repayment without penalties, consider making extra payments or paying off the loan ahead of schedule. This can save you a significant amount of money on interest charges over the life of the loan. Just be sure to double-check your loan agreement for any prepayment penalties before proceeding.
Saving On Interest Is More Important in 2024
By taking the time to research your options, improve your credit, and negotiate favorable loan terms, you can save thousands of dollars over the life of your loan. Remember, every bit of effort you put into securing a lower interest rate will pay off in the long run.
At CarEdge, we’re dedicated to helping you make the most informed decisions when purchasing a vehicle. Whether you’re looking for expert advice, comprehensive data, or personalized coaching, we’re here to help you save money and drive away with confidence. Check out our free resources, or explore our premium car buying help today and start your journey toward the best car loan interest rates available.
Buying a car can be an exciting yet daunting experience, especially with so many factors to consider and decisions to make. But fear not, as we’ve gathered top car buying tips from industry experts to help guide you through the process with confidence. By leveraging these expert insights, you’ll not only save money but also secure the best possible deal on your new car. So buckle up and let’s dive into these expert car buying tips for a smoother, smarter, and more successful car purchasing experience!
1. Set a Realistic Budget and Stick to It
Determine a realistic budget for your car purchase based on your financial situation and needs. For example, if you earn $50,000 annually and can comfortably allocate 15% of your income for transportation, your budget would be $7,500, which comes out to $625 every month. Don’t forget about fuel and auto insurance!
Remember to factor in additional costs such as taxes, fees, and add-ons, which could increase the total cost of ownership. For instance, if you’ve set a budget of $20,000 and live in a state with an 8% sales tax, you should account for an additional $1,600 in taxes.
It’s also essential to be aware of optional add-ons offered by dealers, such as extended warranties, paint protection, or gap insurance, which could increase the overall cost. More on that below. Stick to your budget during negotiations to avoid overspending and ensure you get the best value for your money.
2. Do Thorough Research Before Negotiating
Access premium, behind-the-scenes market insights with CarEdge Data
Understand how car dealerships make money so you can better negotiate on various aspects of the car deal. It’s crucial to research different elements of a car purchase, including dealer holdback, manufacturer incentives, and profit margins, to gain an advantage in negotiations.
Begin by researching the invoice price and the fair market value of the car you’re interested in. This information will give you a solid starting point for negotiations.
Investigate any available manufacturer incentives, such as cash rebates or low-interest financing offers, that can help you save money on your purchase. Be sure to factor these incentives into your negotiation strategy, as dealers might be more inclined to offer a better deal when incentives are available.
CarEdge can be an invaluable resource in your research process. Our comprehensive vehicle listings, depreciation data, and expert advice can help you make informed decisions and better understand the intricacies of car buying.
3. Master Proven Negotiation Techniques
Utilize the car price negotiation cheat sheet to learn about strategies for effective negotiation. Be prepared to walk away, know when to negotiate on price, and don’t be afraid to play hardball to secure a better deal.
Be aware of unnecessary dealer add-ons that can inflate the price of a vehicle. Review the list of common add-ons, and challenge or refuse those that don’t provide value to you as a buyer.
Examples of unnecessary dealer add-ons include:
Paint and fabric protection: These treatments are often overpriced and can be done more affordably elsewhere.
VIN etching: While this security measure can deter theft, dealers typically price it for far more than it’s worth, and you can find cheaper DIY kits.
Nitrogen-filled tires: The benefits of nitrogen-filled tires are often minimal, and filling tires with regular air is usually sufficient.
Pinstriping and decals: These cosmetic enhancements are often overpriced and may not add value to your car. In fact, they might lower the resale value of your car in some cases.
Explore various financing options available to you, such as bank loans, credit unions, or dealer financing. Compare interest rates and terms to secure the best financing deal that suits your needs.
In many cases, you’ll be able to find lower interest rates elsewhere. Dealers mark up their rates nine times out of ten. Get pre-approved with a trusted credit union for better financing rates that will save you thousands of dollars over your loan term.
Even if you choose not to finance with a credit union, you can use their lower rates as leverage when negotiating at the dealership.
Free Car Buying Help Is Here
Following these expert car buying tips can significantly enhance your car purchasing experience and save you money. By setting a budget, doing thorough research, employing effective negotiation techniques, challenging dealer add-ons, and shopping around for financing options, you’ll be well-equipped to secure the best possible deal on your new car. Remember, patience and persistence can make a significant difference in the outcome.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!
As we navigate the new year, the automotive industry is showing signs of recovery, with new car sales expected to lift slightly in Q1 2023. In a recent press release, automotive research firm Edmunds shared its predictions for the industry, highlighting the potential for growth in sales volume. We’ll dive into the key findings from the press release, and summarize the standout data to provide a clear outlook on what’s in store for the car market.
New Car Sales in 2023: Edmunds’ Predictions
According to Edmunds, new vehicle sales in the first quarter of 2023 are expected to reach approximately 3.9 million units, a 0.6% increase compared to Q1 2022. This growth is an encouraging sign for the automotive industry, which has faced numerous challenges over the past couple of years, including supply chain disruptions, inventory shortages, and fluctuating consumer demand.
New Vehicle Sales by Segment
2023 new car sales show steady popularity for SUVs and crossovers
Edmunds’ predictions also shed light on the performance of various vehicle segments in Q1 2023. SUVs and trucks continue to dominate the market, with the SUV segment expected to account for 54.5% of new vehicle sales. Trucks follow closely, comprising 21.7% of the market share, while passenger cars trail behind at 23.8%. This trend highlights the ongoing consumer preference for SUVs and trucks, which offer more space, versatility, and capabilities compared to traditional passenger cars.
Back in 2021, SUVs held 52.5% of U.S. market share, trucks were 23.4%, and sedans were 24.1% of total light-duty sales. As we can see, vehicle sales by segment are holding relatively steady following the rapid rise of crossover SUVs in the past decade.
New Car Market Share by Manufacturer
Edmunds also provides a breakdown of market share by manufacturer, with the top three spots held by General Motors (16.6%), Toyota (14.3%), and Ford (13.5%). These industry giants continue to lead the pack, benefiting from strong brand recognition, diverse vehicle lineups, and loyal customer bases. It’s important to note that these figures could still fluctuate, depending on factors such as production capabilities, consumer demand, and inventory availability.
In Summary: Q1 2023 New Vehicle Sales Predictions
Total Q1 2023 Sales: 3.9 million units (0.6% increase from Q1 2022)
SUVs: 54.5% market share
Trucks: 21.7% market share
Passenger Cars: 23.8% market share
General Motors: 16.6% market share
Toyota: 14.3% market share
Ford: 13.5% market share
The Q1 2023 new vehicle sales predictions from Edmunds paint an optimistic picture for the automotive industry, as sales are expected to lift slightly compared to the previous year. The data also highlights the ongoing dominance of SUVs and trucks in the market, as well as the strong positions held by major manufacturers like General Motors, Toyota, and Ford. As we move further into 2023, it will be interesting to see how these predictions pan out and whether the industry continues on its road to recovery.
As always, CarEdge will keep you updated on the latest trends and insights in the automotive world, helping you make informed decisions on your car-buying journey. Check out the different ways we can help you buy your next car for less. We’re real people helping drivers save real money! The proof is in the pudding: these success stories show how much the CarEdge Community saves every day.
Purchasing a vehicle is a significant investment, and understanding your potential monthly car payments is crucial to ensure it fits within your budget. One of the best ways to estimate your payments is by using a car payment calculator. With a plethora of options available, CarEdge’s tool stands out as an ultimate car payment calculator that is both user-friendly and reliable, and never sells your data to third parties. This article will guide you on using this top-ranking calculator, discuss the importance of understanding your monthly payments, and explain the factors that influence your car loan payments.
The Importance of a Reliable Car Payment Calculator
The CarEdge Car Payment Calculator includes resale value projects.
A reliable car payment calculator is an indispensable tool for potential car buyers. It helps you gauge whether a specific vehicle is affordable and prevents you from overextending your finances. While dealer salespeople may encourage you to focus solely on monthly payments, it’s essential to consider the overall price of the vehicle, interest rate, and loan term as well. This comprehensive approach ensures you make well-rounded decisions and avoid deceptive sales tactics that could cost you more in the long run.
Key Factors Determining Monthly Car Payments
Your monthly car loan payments depend on three primary factors:
loan amount
interest rate
loan term
The loan amount is the cost of the vehicle minus any down payment or trade-in value. The interest rate, determined by your credit score and market rates, represents the percentage charged by the lender for borrowing money. Lastly, the loan term refers to the duration of the loan, typically expressed in months or years. Balancing these factors helps you find the right car loan for your financial situation.
Understanding Car Loan Amortization: Principal and Interest Breakdown
Auto loan amortization example from the CarEdge car payment calculator
Car loan amortization is the process of breaking down the loan repayment into equal monthly installments over the loan term. It allows borrowers to understand how each payment contributes to the principal and interest components of the loan. In the initial phase of the loan term, a larger portion of the monthly payment goes towards interest, while a smaller portion is allocated to the principal. As the loan progresses, the interest component decreases, and the principal component increases, eventually leading to the loan’s full repayment. The CarEdge Car Payment Calculator shows your full amortization schedule, so you know exactly where your money is going.
Estimating Monthly Payments with CarEdge Car Payment Calculator
Simplify your financing with one calculator that takes into account the loan amount, interest rate, and loan term to provide you with an accurate estimate. Plus, see resale value projections too!
Input your down payment amount, and if you have a trade-in, include that value as well
Use the drop-down menu to select your credit score to estimate the interest rate (APR)
Choose the loan term by selecting the number of months or years from the drop-down menu
Review the calculated monthly payment displayed
By following these simple steps, you can quickly and accurately estimate your monthly car payments and make informed decisions when purchasing a vehicle.
Keep in mind that while monthly payments are an essential factor, they should not be the sole consideration when purchasing a vehicle. It’s crucial to account for the overall price, interest rate, and loan term to make the best decision possible.
CarEdge’s top-ranking car payment calculator simplifies the process of estimating your monthly payments, providing an accurate and user-friendly interface. By using this powerful tool, you can confidently navigate the car-buying process and find a vehicle that meets both your needs and financial requirements.
