5 Factors to Consider Before Getting an Auto Loan

LAS VEGAS - Sept. 15, 2020 - PRLog -- Purchasing a new vehicle is a big deal. Aside from a home loan, an auto loan is the biggest chunk of money that most people will borrow at one time. However, not all auto loans are the same; interest rates and payment terms vary widely and have a big impact on how much your vehicle actually ends up costing you. Understanding how a few factors affect how much of a loan you can get and how long it'll take to pay it back before you set foot on a car lot can help you make a decision that you won't regret.

5 Things to Consider Before You Get an Auto Loan

Your Credit History

If you have a high credit score (800 or above), you can expect a really low interest rate. However, if you have less-than-stellar credit, you'll typically have a higher interest rate and higher monthly payments. In this case, you may want to consider delaying your car purchase to see if you can raise your credit score or see if you can pull together more money for a bigger down payment to lessen your loan amount.

Loan Repayment Terms

To lower monthly payments, some buyers opt for long loan payment plans. While an 84-month plan may have significantly lower payments than a 36-month plan, over the lifetime of the loan, you'll end up paying more in interest. If possible, opt for the highest monthly payment that you can comfortably afford.

Incentives

In some cases, dealers may run specials where they give incentives for purchasing a vehicle. You may have the option of getting a very low interest rate or a cash rebate. To find out which option saves you the most money, find an online calculator that lets you compare the cash rebate option to the low interest rate.

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