Car Financing
When you have chosen a car, the dealer will want to know if you will be financing the purchase. Unless you are paying cash, the options of finance are leasing or taking an auto loan to buy the car with.
an auto loan can be very simple and convenient. After having seen a car you like you can drive out of the dealership with it that same day. Keep in mind that taking a loan through a dealer instead of a bank can work out as more expensive. The dealer may charge more in interest and finance rates and the cost of these can be affected by your credit rating.
After asking you to fill in a credit application, the dealer will assess your credit score and determine the terms of your loan from there. The loan will be influenced by the price of the car, sales tax, title and licensing fees as well as interest. Most people choose to pay off their car over a period of three to five years. The longer you take to pay off the loan, the less the monthly payments will be. Although this seems like an attractive option, you will end up paying more in interest the longer your loan is.
With an auto loan you may be asked to make a down payment, or deposit, although due to dealer competition this may be a very small cost.
While paying off your loan, the finance company owns your car. If you fail to meet payments, they may repossess the car to cover the loan. Once you finish paying off the loan, the car is then yours.
Do make sure to read the fine print, and ask about any points you are unsure about. This will help to save you from any aggravation further down the track.
