Understanding Loan Terms

What To Consider When Getting A Car Loan

28 October 2019

Stanley Simmons

If you're in need of a new vehicle but don't have a lot of cash sitting around, you may want to take out an auto loan. Many people rely on auto loans to afford a new car. This is an easy way to break up the big expense, and it can allow you to get a much better vehicle than you're currently driving. If you're ready to apply for a car loan, here's what to consider during the process:

Make Sure You Have Some Savings

Most auto loans will require you to have a down payment. This means you'll need to have some cash on hand in order to qualify for a loan. If you have some flexibility as to when you buy a new car, take a bit of extra time to save up so that you can make a significant down payment. This will also help to make your total loan amount lower.

Consider the Length of the Loan, Not the Monthly Payment

Many car dealers will try to focus on the monthly payment for your car. They may draw you in with a low figure. While that can be great and may sound affordable, it may mean you'll be taking out a loan for a longer period of time. Be sure to ask about the length of the loan and consider taking out a 3- or 4-year loan. You'll pay less in interest and pay your car off a lot faster this way.

Research Promos and Deals

Many car dealerships will offer special financing deals and promotions. They do this to attract customers so they will get a loan. It can be an advantage to you and you can get a great rate if you pay attention to these deals. Shop around and look at special promos and deals in your area.

Your Credit Score Is Important

When you take out any type of loan, your credit matters. You'll want to have a grasp of where your credit score currently stands so that you're able to get the loan terms that you want. If you have poor credit or little credit history, you may want to spend more time working on improving your score before taking out an auto loan.

These are some essential things to consider as you begin to look at car loan options. Educate yourself and prepare so that you can get a great vehicle and a good loan to match.

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About Me

When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.