Although a few people shell out cash for their cars, most people get a car loan, whether they are buying or leasing. The kind of loan you get can have a dramatic impact on how much you ultimately pay for your car, and if you’ve never gotten a loan before, it can be confusing. If you’re in the market for a new car , here is what you need to know about car loans.
Your interest rate is one of the most important factors.
The interest rate on the loan determines how expensive it will be for you to borrow money. It is one of the most important parts of your loan. You can find your interest rate on your loan agreement listed as APR—annual percentage rate. The lower the percentage rate, the less you will pay over the life of your loan. Your interest rate is calculated based on a few different factors, including the current market rates, whether you are buying a new or used car, and the term of your loan. However, one of the biggest influencers is your credit. The better your credit score, the lower the rate of the loan.
The term of the loan also impacts how much you will pay.
Stretching your payments out over a longer period of time will make your monthly payments less, but it will also make your car more expensive in the long run, because you will pay more interest. For some people, the ability to pay less per month is worth paying for longer, but most people will limit the term of the loan as much as possible to save money.
There is no car loan that works for everyone.
The best car loan for you depends on many different factors. The loan a friend got may not be the best fit for your needs. Weigh up all of the information regarding your loan, and determine which terms fit your financial needs before signing on the dotted line.
Sierra Toyota helps every customer find the right car for them, thanks to a huge selection of new and used vehicles. Start the process of finding your car by calling this Sierra Vista Toyota dealership at (520) 458-8880.