Understanding the Auto Loan Basics Can Help You Save Money
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.
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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.
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.
For a more pleasant car buying experiences with fewer surprises, don’t wait until you’re sitting in front of the loan officer to explore your auto loan options. Shopping around for an auto loan and getting pre-approved by a lender beforehand can give you a clear picture of what you can afford. It’ll also help you negotiate the vehicle’s price.
Paying Back Your Loan
If you get into a bad car accident a month after you purchase your vehicle and you total your car, you’re still responsible for paying back the car loan. Unfortunately, depending on the age of your vehicle, it may have depreciated in value quite a bit since you purchased it. Adding GAP insurance to your policy covers the gap between what your vehicle is worth versus what you owe on it.
Insuring Your New Vehicle Through Nevada Insurance Enrollment
Your car’s purchase price is just one expense to consider; once you get your new vehicle, you need to purchase an auto insurance policy right away. An auto insurance agent at Nevada Insurance Enrollment can help you evaluate your needs and budget and find the right coverage for your vehicle.
Read More: Auto Insurance in Las Vegas, Nevada
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DISCLAIMER: It is important to note that the information contained herein is made general for the purpose of explanation. You should consult your policy for exclusions or other language that may alter your policy.