A Bit About Car Loans

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The majority of people wanting a new or used car decide to take out a loan. Taking out a loan means that the lender buys the car for you, and then you have a certain number of years to pay them back the money they spent on the car. Many people have anywhere from 36-72 months to pay back their loan, and depending on how much money you can pay back each month you can choose a shorter or longer loan term.

You might be new to the car-buying scene and want to learn more about how car loans work. Or maybe you took a loan out a while ago for a car, have paid it back, and you kind of forgot about how the whole process worked. Maybe you have taken out a loan for some other purpose, as to pay for school or for a business, and have stumbled across this article while reading about another automotive-related topic. Keep reading to learn about the basics behind car loans!

A Financial Commitment

Before you think about seriously financing a vehicle you need to ensure that you will have the money coming in every month to do it. Make sure that you are currently meeting all your necessary living expenses (rent, utilities, health insurance, etc.) before you take this on.

Be aware that if you miss a certain number of payments your creditor may repossess your vehicle without any such warning, like taking you to to court over the situation.

Interest Rates

Your interest rate will be what you are essentially paying to take out the loan. Your interest rate depends on your credit score. Interest rate is often referred to “Annual Percentage Rate,” or APR, and you pay a little bit of this each month.

Co-Signing

Some creditors might mandate you get a co-signer if you have not yet built up much credit. This person is as legally responsible for paying back the loan as you are. Both the co-signer and you have a legal obligation to follow through with the contract i.e. making the outlined payment each month on the loan.

Dealership Financing

One place you can consider getting your financing through is your local dealership. Dealerships make it easy to get your vehicle and get your loan all set up in one place. Dealerships occasionally offer incentive, low-rate or manufacturer-sponsored programs to buyers that are could have special requirements like a short contract length (like 36 or 48 months) or a large down payment. What happens is that you and the dealership come up with a contract that states that you are buying the vehicle and will pay the financed amount over a period of time. You will also pay a finance charge. Credit may be important here.

Dealerships have relationships with many finance institutions and banks to provide you with many financing choices. You may also find it convenient to finance directly through a dealership because dealerships tend to have weekend and evening hours, perfect for people who work 9-5. A local car dealer, York Chrysler Dodge Jeep Ram in Crawfordsville, IN would be happy to guide you through the process of financing your vehicle.

  

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