Getting a new car is exciting, but many buyers go in blind and end up getting financially taken advantage of. Go into the process informed about what you can afford and know what to look for when getting a car loan.
The monthly payment is the amount of money you will have to pay every month until your loan term ends. Your annual percentage rate (APR), loan term, and loan amount go into calculating what that monthly amount will be. Eastex offers a loan calculator to get an idea of how much that amount will be.
Annual Percentage Rate (APR)
The APR is one of the most important factors to keep in mind when going through the purchasing process. The annual percentage rate is the amount you will pay in interest in addition to the actual cost of your new or pre-owned vehicle. The higher the percentage rate, the more your monthly payment will be – so it is critical to get the lowest APR as possible. The APR is dependant on factors such as credit score, current debt, and the length of your loan.
The loan term is the length of your loan. The average length of auto loans in 2019 is 68 months, while longer terms are becoming more and more common. The benefit of having a longer loan term is your monthly payment will be lower. The drawback is that your annual percentage rate is often higher the longer your loan term is. In other words, the longer your loan term, the more you pay over the length of the loan.
The loan amount is the total amount of money borrowed for your car loan. The more money you borrow, the higher the monthly payment. Your loan amount typically includes the price of your vehicle, the amount potentially owed on a trade-in, and applicable taxes and fees. If you save money for a downpayment, your overall loan amount will be reduced.
Penalties and fees
Research your car loan before moving forward. Some loans can include prepayment penalties, you could be penalized if you pay off your car loan before the loan term is up. Also, look out for processing fees, these are more typical. Some loans have flat rates for processing fees, others have a percentage based fee. Ask as many questions as possible and read any fine print to discover unknown penalties and fees.
Shop Wisely with Eastex Credit Union
Auto dealers often try to focus exclusively on the monthly payment, but a lot more goes into what you end up paying out of pocket throughout the loan term. Avoid getting taken advantage of by staying informed. Eastex Credit Union is on your side through the entire car buying process with advice and the best auto loans so you can buy confidently while knowing you are getting the best deal.