Auto Loan Financing
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What should you be looking for when finding the best auto loan financing?
In your search for the best auto lender for your needs, you should not only focus on the reputation and credentials of the lender, but the actual offer they present to you. It can be all too easy to get carried away with the incentives they may tempt you with such as discounted car insurance or giveaways, but you should really be focusing on the best auto loan financing for you.
Here are the top five things you should thoroughly research when looking for auto loan financing:
Firstly, you should always determine what auto loan interest rate each company will offer. The interest rate is how much the auto lender will charge you for borrowing the money to buy a car. Almost every lender will have different interest rates. The interest rates will also vary depending upon your personal circumstances such as having an excellent credit history, or if you need a car loan for bad credit. So don't always be swayed by dealers offering you 0% financing. If you suffer from a bad credit history, you may not qualify for that rate anyway.
The term means how long the loan will run for. Some auto loan financing lenders will try to wow you with offers of $199 per month for the car of your dreams, but they will not have mentioned that it will take you ten years to pay it off! The shorter the term of the loan, the less interest you pay and the quicker you pay the loan off. This does mean that the monthly repayments will be higher but you need to choose a suitable term that provides you with affordable monthly repayments. It's a question of balancing the two.
We have mentioned this in point two briefly, but you should also make sure that the loan has an affordable monthly repayment. This means the amount that you will pay back on the loan every month. If you set the term of the loan too low, you may have difficulty in paying the loan back. This is the last thing you want as if you default on your loan this could have a detrimental effect on your credit history.
Make sure you check the small print of any auto loan financing deal for hidden charges. If charges for administration, missed payment fees and late penalties, to name but a few, are extortionate then you should seriously reconsider your choice. Otherwise you may end up paying more in extra costs than you could ever imagine.
Finally, you should always ask your potential auto lenders for an amortization schedule. This schedule breaks down the amount of capital and interest payments you are making on the loan every month. It will help to illustrate just how quickly your interest repayments will decrease as the capital payments increase over the term of the auto loan.