Surveys repeatedly conclude most vehicle buyers rely on auto loan financing to afford the purchase of a new car. That’s understandable, considering cars are big-ticket items and make the short list of most people's biggest purchases. Many consumers are fixated on securing a car loan with the lowest possible monthly payment. A smarter approach is to negotiate a car loan that ensures you pay the lowest possible price for your new car over the long term.
Understanding your monthly car loan payments gives you the power to negotiate the best deal for your specific situation. Here are some phrases you’ll hear related to your loan. More importantly, here are definitions of what those phrases mean.
The more you can chip away at the principal you owe on your loan, the more quickly you can pay it off and lower your interest fees. The sooner in the month you pay your loan, the more of that payment will go toward paying down the principal balance. The more money you can use for a down payment, the less interest you will incur. The better your credit score, the better interest rate you will get. The more quickly you pay off the loan, the less you will pay over time.
If you have cash on-hand to pay outright for a new car, that’s great! If not, you’re in the majority of people who need a car loan to buy a new car. Essentially, you have three options for securing a loan:
Each option has its pros and cons. Good advice for making any financial decision is to do your research.
If you live in or around Hamburg, NJ, and are in the market for a high-quality pre-owned vehicle, contact us at DeBoer’s Auto Sales & Service. We have made it easy for you to research financing options via our electronic credit application and online loan calculator. We also encourage you to stop by and discuss your financing options in person. Our goal is to make every customer a highly satisfied customer.