Car Loans In A NutshellThere is more to a car loan than just driving and paying. It’s a larger payment on a secured loan, usually several hundred dollars a month. In fact with a car loan, you need to keep paying even if the car stops running. Some of the things about cars to consider are finding the car that does what you need it too. A mustang is hard to fit a large family, while a large van is kind of expensive on gas for a single person driving around town. Finding the best vehicle for your needs that will last you a while is important. Once you have signed the car loan contract you can’t just walk away. The first thing you will find is a wide variety of loan terms and interest rates. Depending on your down payment, your credit score, and the age of the vehicle you want; the rates and terms you can get will vary. Terms run from 12 months up to 60 months (5 years) and will vary a lot depending on how new the vehicle is. With a new car or low miles pre-owned (with great credit), you can even get longer terms in some cases. Often though, these loans will have at least a slightly higher rate than the conventional terms.Interest rates will also vary based on the term, age of the vehicle, as well as more directly on your credit score. Another aspect that will definitely impact your rate is how much you put down. Often a loan approval is based on your down payment. They ask for a larger down payment. Many people will consider their trade in their down payment on their new car loan. This can be true, however often you don’t get as much for a trade in as you can get by outright selling your old car. Often, banks won’t consider it as much of a down payment either. As you see, having a good credit score will also influence your ability to get a great loan interest rate, or any loan at all. Even if you aren’t considering a car loan right now, it’s wise to take your best options and build up your credit score. A bank considering your car loan, will look at your ability to pay, how much you are putting into the deal up front, how your payment history is, as well as your work history. Being in the same home and job for 5 years will take you a long way. One last thing to consider when applying for a car loan is how often you apply for credit in general. When you do this, it will show on your credit report for a year, and too many applications will reduce your credit score for that period. After all is said and done, hopefully you have a car loan with a good payment, as well as a vehicle that serves its purpose for the whole term and longer. |