As the name suggests here in this article we would be discussing the procedure of financing a car.
Financing a car need not be complicated. Once you have understood its operating basics. You will be in a much better position to decide on the car financing option that’s best for you.
Financing a car adds to the total car cost
Once you have decided on the car model you want to buy, you have 2 payment options:
- Pay for the car in full i.e. single transaction or
- Get it financed over time with a loan.
Financing is the most availed option. But it does add to the final cost of the vehicle that you have to pay. It is because of the fact that you’re paying for the cost of credit (interest and other loan costs), along with the car cost.
Financing a car with a loan
Three major factors play an important role when it comes to using a loan to finance a car:
- Loan amount (The total amount you’re borrowing to get the vehicle financed),
- Annual percentage rate (also known as the APR, i.e. the interest rate you are going to pay on your loan) and
- Loan term (the maximum amount of time you have been provided to repay the loan amount).
Old cars attract higher interest rates as compared to their New Counterparts, when it comes to Car financing. There are a whole lot of Auto Loan Calculators that show you the:
- Different loan amounts,
- APRs and
- Terms and Conditions that will affect your monthly payment.
Try to look for car loans that have no prepayment penalty. This will save you a lot of money in the long run, in case you decide to pay off your loan early or refinance your car loan.
In case you feel a need to know more about the Car Financing concept, and more car finance options available out there, a Google Search will add to your knowledge bank definitely.