How do you get the right auto loan?
When you go to purchase a used car, you likely have a specific budget in mind. It’s simple to show up, talk to the financial experts at Auto Simple and agree to terms that leave you with an affordable monthly payment. It’s not that this approach is wrong, but it’s worth considering your different options. Before you decide on a car, we’re here to help you learn how to get the right auto loan for your finances.
Choosing a loan for your budget
Unfortunately, auto loan rates are rarely under your control. This is largely dependent on your income and your credit score. Your loan percentage may impact how quickly you want to repay your loan, however. When your loan rate is very low, below five percent, you’re often offered loan terms that can exceed six years. The monthly payments are low, which can make it tempting to accept, but it’s best to take time to consider.
When you accept a long-term length, the interest rate over time will add up quickly. It can be smart to accept such a loan as long as you can pay extra every month. This way, you know that you can pay less if you have a life emergency.
One thing to watch for are different loan types. A simple interest loan is ideal as it allows you to pay off the interest as it accumulates, so you only pay the interest on years that you have the loan. Pay it off early? You’ve saved yourself money. Watch out for loans with a pre-computed interest rate that is already built into your payments and will not be decreased even if you pay off the loan early.
It’s always your best bet to go for a simple interest loan and pay it off as soon as possible to reduce interest costs over time.
Do you have any other questions about buying used cars? Leave us a comment here at the Auto Simple Blog.