While there are advantages to paying for a car with cash, few people have $15,000 lying around to buy a car outright. Therefore, most consumers are going to finance the car with an auto loan. What should you know about auto loans before you apply for one? Learn what to know about automotive financing.
Good Credit Gets a Better Interest Rate
Borrowers who have good credit are going to get the best interest rates on loans. However, you shouldn’t worry if you have bad credit and need to get a loan. Bad credit lenders are willing to give loans to almost anyone who applies.
A Strong Down Payment Helps
If you can, you should try to make as large of a down payment as possible. This increases the odds of getting a loan to pay for the rest of the car. Putting money down also makes it easier to pay back your loan as you will have less to repay.
Pay the Loan Off Early
Although lenders may be willing to give you eight years to pay back the loan, you should pay it off as soon as possible. The advantages to doing so include:
- You Pay Less Interest
- You Build Equity In Your Car
- You Can Get A Better Interest Rate On Shorter-Term Loans
Consumers often believe that longer car loans are a good thing because it lowers their monthly payment. However, you will pay more for the car because of the extra interest being tacked on to the loan each month.
It is important that you understand what it means to borrow money. When you come to Overdrive Automotive Center know how much you can afford and what your credit looks like, you have all of the leverage. This allows you to get a loan at an interest rate that you can afford and pay off in a reasonable amount of time.