Understanding Auto Loans
So you’re ready to purchase a new vehicle? It’s an exciting time.
But you’ll soon discover that there are several considerations that come with car buying. It can feel like a very tedious process, from dealing with the dealership, to picking new or used, so on and so forth. One of the most major factors, though, will be the auto loan that finances your purchase.
Some elect to purchase their vehicles outright, paying straight cash for their new rides. But the implications behind securing an auto loan may serve you better than buying outright. Still, it’s a lot to take in and keep track of, and luckily, Newton Federal is here to give you the breakdown.
Knowing Your Options
There are a number of ways you can approach purchasing your car. As stated, you can pay cash. This means you’ll be paying the entirety of the car’s price before leaving the lot.
Then there’s the option of leasing. This is when you fashion an agreement on the number of years you plan to have the car in your possession, at a specified rate. The final option is the purpose of this article; using an auto loan. You can secure one of these from a credible bank, or even directly from the car dealer.
Direct Vs Dealer Financing
When financing your car, expect to pay back the loan over an extended period of time. As with most loans, this means that interest payments will be nothing short of a guarantee. Regardless of who you secure the loan from, it’s a good idea to visit multiple possible funding sources.
This will give you a full perspective on your available options. If you go the direct route, plan on speaking directly with your chosen financial institution. You’ll send them your payments, and can even expect to see better variation of options and incentives. This is especially the case if it’s already your home bank. In the dealer scenario, you can expect them to act as a middle man, eventually selling your loan to a banking institution.
How to Know the Right Deal
There are a few rules of thumb that can help you avoid headaches and stress along this journey. First, know the value of your down payment. Paying around 20% of the full cost upfront is a great measure to follow. A good deal also shouldn’t go over a tenth of your monthly earnings. Last, aim for loan lifetimes of less than 5 years. This helps to avoid less favorable interest rates, among other leg ups.
Banking with Newton Federal
Have business banking needs that aren't being met? That's where Newton Federal comes in. We offer various business accounts, as well banking tools to help ease the demands of being a business owner. Contact us today; our bankers are on hand to see to it that you get the support you need.
Serving The Banking Community Since 1928.