Understanding Your Auto Loan
Whether you have good credit or bad credit, your auto loan will consist of the same basic components:
Term -The length of time that a lessee will make payments on a loan. Typical car loans have terms of 24, 36, 48, 60, or 72 months. A shorter term will lead to a higher monthly payment but your vehicle will be paid off more quickly.
The percentage of a sum of money charged for its use. The better your credit situation, the more power you have to negotiate a lower interest rate.
The interest rate is best understood and compared using APR -the "Annual Percentage Rate" is a yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR, and the rate is used to compare the various types of loans available, making even simple interest and compound interest loans comparable.
The difference between the loan amount and the purchase price; usually paid immediately upon purchase in the form of cash or trade-in value.
Now that you understand the basics of auto loans, you can try out our Loan Calculator to get a better idea of what you can expect.
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Did you know?
Lenders consider more than just your credit score when deciding whether or not to extend credit. They consider the amount of debt you can handle given your income, your employment history, your credit history, as well as staying within their institutional underwriting policies.