If you want a car loan without getting screwed, you have landed on the right page. Financing a car is a big deal because if you don’t do it correctly, you will lose a ton of money. We have narrowed down the full auto loans and car financing into six points. They will determine what you can or cannot afford as a monthly car payment.
Here are the six tips to know about auto loans and car financing.
1. Amount Borrowed and Deposited
The amount borrowed includes your car purchases, taxes, and prior debts. It’s everything you need to borrow from a bank to purchase your car. The deposit is the payment you make to receive your car. You may have an option of paying no deposit, depending on the individual’s preference.
2. Do Your Research
Make sure that you research the car you’re buying, so you don’t end up paying for extended warranties, cleaning, or anything like that because these prices are negotiable. While researching, asking yourself how does car finance work is the first step before proceeding further. Remember the goal is to understand what the process entails to get the best price possible on your car purchase.
3. Interest Rate
It is the amount of money that you have to pay back to the bank to have your car loan. To get the best interest rates, you should have excellent credit or a co-signer with good credit. If you are using a cosigner, make sure that you can make your monthly payments every single month. If you’re late just once, you will hurt their credit score.
4. Best Car Loan Interest Rates
The best car loan interest rate that a bank can give you is 3-5% which will cost you $30-50 a year per $1000 borrowed. So, if you’re financing $20,000, you are looking at $600-$1000 interest per year, and that’s on the optimal card and with a good down payment.
5. Length of the Loan
The length of the loan is the amount of time you will make the monthly payment until a loan is paid off. The longer the length of the loan, the smaller your car payments are going to be. Banks and dealers increase the length of your loan to get more payment from you. The length should be 24-60 months. If you go with anything that’s longer than 60 months, the interest rates will increase, and you will lose too much money.
6. Pay Whenever Possible
If you want to free yourself from these payments early, then pay whenever you have the money. This will help you pay off the car earlier.
Before you go out and buy a car, please call your insurance to find out how much the new car will cost you. Because if you’re looking for some fancy BMW, and it costs you a hundred and a fifty bucks a month, then it’s worth it.
With these tips in mind, you’ll have everything you need to know regarding how to handle car finances. Make sure to get the best price for the car and the best interest rate. If you follow these points correctly, you will get the best financing for your car possible.