What You Should Know about Car Loans
Navigating the complex world of automobile loans can be daunting even under the best of conditions. However, if you are like the majority of people, it is something you will have to contend with. The good news is that there are ways to avoid major pitfalls and we’re going to share a few of those with you below. Let’s take a look.
All About The Numbers
Loans ultimately hinge on a few key numbers and its these that you have to focus on. A down payment is an amount that you have to pay out of pocket at the time the loan is taken out. This number tends to stand out significantly, as it is usually a couple hundred dollars at least, if not more. It’s good to have a little bit of money saved up before you go shopping, as it will help smooth out this part of the loan process. Once the down payment has been sorted you still have the interest rate and the monthly payment to consider. The interest rate, while important, is not the number to focus on. While high-interest rates are to be avoided, the additional money they cost you is spread over the life of the loan and have a negligible impact on your day to day expenses. Conversely, the monthly payment is the specific amount you will pay every month for the next several years.
Once you understand the numbers above, you will be able to flesh out what you can afford. The more that you are able to put towards a down payment, the lower your monthly payment will be, so it is advisable to have as much saved up as possible. Knowing how much you can put down and how much you can afford to pay monthly will ultimately determine the limits on what kind of vehicle you can afford. If you have a specific vehicle in mind, you should work out these numbers ahead of time to ensure you are able to get it when you visit the dealership.
Your credit score, while ultimately the result of your own actions, is not something that you can alter on the fly. Your score is what it is at the time you go to purchase a vehicle, but you can retrieve your score before you go to shop so that you can plan around it. Your credit has the most impact on your interest rate, which will affect the amount you spend on the loan in the long-term as well as a portion of your monthly payment. The better your credit, the less those two expenses will be.
Unfortunately, some lenders do not operate in good faith. Dishonest lenders, also known predatory lenders, will seek out car buyers in the hopes of ensnaring them in a loan that isn’t favorable. Dealers will frequently offer financing and the first ‘red flag’ of a predatory dealer is one that implies you must use their financing. Nothing could be further from the truth and you are free to finance your vehicle however you see fit. Additionally, many dealerships offer supplemental insurance such as auto, disability or life insurance. None of these things are mandatory, at least from the dealer, and you should weigh each one accordingly.
All in all, if you follow the guidelines listed above, you will be well on your way to purchasing a new Kia that will keep you happy for years to come. If you are interested in learning more, we encourage you to contact us at 480-425-5300. We are Mark Kia and it would our genuine pleasure to assist you.