Whether you’re buying your first car or your trading in your old car for something new, purchasing a new car is exciting. Spending time researching the different options, looking at different models in car lots and taking a few vehicles for a test-drive is all par for the course. It’s a big decision, trying to choose the right vehicle for your needs while staying within your allocated budget. And when you finally find the right car, it really is a great feeling.
Of course, before you drive away on your new wheels, you need to find a reputable financial provider to help you organise the financing. It’s important to take some time to understand exactly what getting a car loan entails. Car loans from Latitude and other financial institutions can help you to get your finding organised quickly and conveniently so that you can quickly get behind the wheel and out on the road.
Continue reading to learn more about car loans and some different things you need to consider when choosing financing for your next car.
What Type of Car Loan Should You Get?
Depending on your needs, you may choose from a number of different car financing options. Usually, the type of car loan will depend on whether you are an individual or a business. In the case of car loans for individuals, it’s always a good idea to shop around so you can secure the best deal. Look for a loan with low interest rates, that doesn’t charge extortionate late payment fees and that offers you an option to pay the loan back early without substantial termination fees.
Consider Your Credit Score
The amount of money you can borrow depends hugely on your credit score. This is the one thing that the lender will consider above all else before granting or denying your loan application. If you have a good credit score, the lender will assume that you are low-risk and therefore will be more likely to approve your loan and may even apply a lower interest rate
Can You Make a Down Payment?
Essentially, a down payment is an amount of money that you will pay upfront for your car before you have any financing available. Making a down payment on your new vehicle will lower your principle and therefore the loan will cost you much less in the long run.
As a general rule of thumb, if you’re buying a new car, you should aim to put down a 20% down payment on the vehicle. For a used car, about 10% is usually normal. The last thing you want to happen is you end up owing more than the value of the car over time. Making a solid down payment can help to eliminate this possibility significantly.
Pay Attention to the Term of the Loan
Put simply, the term of a loan is the period of time that you have to pay the loan amount, plus interest, back to your financial provider. Usually, personal car loans have a period of three to six years, however, if you want a shorter or longer term, you should speak directly with the lender to work out a deal that works for you both.
If you choose a longer term, you will have smaller monthly repayments but you will end up paying more in interest, meaning the loan and, indeed the car, will end up costing you more over time. With a shorter-term loan, you will pay less interest but your repayments will be higher each month. Take some time to weigh up your options to find a solution that suits you financially.
Shop Around for the Perfect Car Loan
As with any major financial decision, it’s important to figure out exactly what it is that you need before taking any further steps. Once you know what you need, do some research online, speak to friends or family who may have secured financing recently and talk to a few different financial providers. Find a personal car loan that works well for your current financial position and one that will allow you to drive away in the car you want, without costing yourself a fortune in the process.
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