Consumer Portfolio Services are essential when shopping around for auto financing. As a consumer, it’s important to understand the different types of auto loans available today in order to make the smartest decision when purchasing your next vehicle.
How Credit Affects Financing
Most auto loans require some kind of credit verification. This can affect the loan and interest rates offered. Those with higher credit scores will often be approved for lower rates. Lower scores mean higher interest rates and more restrictions on loan terms.
Down Payments: An Investment
Making a down payment for an auto loan is not only prudent but shows lenders you are serious about paying off the loan. When making a larger down payment you can often negotiate better terms, including a lower overall APR (annual percentage rate) and shorter loan term.
Researching Different Types of Loans
It’s important to research all of the different options available when looking for an auto loan. Credit unions, banks, and even some new car manufacturers offer special financing deals that may fit your budget and needs. Doing your due diligence by shopping around can result in a far better deal than if you just take the first offer that comes across your desk.
Checking out Promotional Offers
Sometimes certain companies or organizations will offer promotional auto financing deals. These offers can also be great ways to get a better rate and terms. Checking with your employer or other associations you may belong to can yield some interesting opportunities.
The Pros and Cons of Leasing
Leasing has become a popular way to drive one of the most recent models. While it does have the advantage of reduced monthly payments, it also has its share of drawbacks. First, you don’t really own the car unless you pay the full balance out of lease. Second, at the end of a lease, you’re usually obligated to turn the vehicle back in instead of having any equity in it.
Refinancing Your Loan
Refinancing your current auto loan can be beneficial if you’re locked into a high APR. By shifting the loan over to another lender — preferably one offering a lower APR — you can save money. With refinancing, you may also be able to get a longer loan term, resulting in lowered monthly payments.
Auto financing can seem daunting at first, but with proper research and preparation, you can find the loan option that best fits your personal situation. Understanding the different types of loans available and researching them thoroughly can help ensure you make the right decision.
Auto financing is a type of loan that an individual can use to purchase a car. Typically, it involves committing to a long-term payment plan in exchange for use of the car prior to full payment being made. Auto loans are secured loans, meaning that the lender has a legal ownership interest in the car until the debt is fully paid off. Auto financing can be used to purchase new cars, but it can also be used to purchase used cars from dealers or private sellers. Auto loans are typically provided by banks and credit unions, as well as online lenders, to those with a good to excellent credit history. The approval process usually only takes a few minutes and the loan can be used to purchase the car of the borrower’s choice. Interest rates and loan terms vary significantly, so it is important for individuals to compare various lenders before choosing an auto loan.
