HOW TO FINANCE A CAR

how to finance a carIf you’re interested in getting a new or used vehicle near North Andover, Peabody, or Danvers, you’ll need to determine how you’ll pay for it. The most common way that drivers buy a car is by taking out a loan.

There are several things to keep in mind when it comes to getting an auto loan. Below, we’ll tell you exactly how to finance a car. Read through our informative guide, and contact us at Ira Lexus of Danvers if you have any questions.

1. KNOW YOUR CREDIT HISTORY.

Before you can APPLY FOR A CAR LOAN, it’s important to know your credit score. This 3-digit number can range from 300-850, and is taken from three main credit bureaus: Equifax, Experian, and TransUnion.

The way your credit score is calculated is usually from things like:
• How long you’ve had credit
• The types of credit you have (credit cards, students loans, etc.)
• How often you make payments
• How many accounts you have in good standing
The good news is that no matter your credit history, you can still get an auto loan. But keep in mind that the higher your credit score, the lower interest rate you’ll get on a loan.

2. KEEP THE LOAN TERM SHORT.

When it comes to the length of an auto loan, you may think it’s better to keep it longer, so that you can make lower monthly payments. But that’s actually a common misconception.

When you’re taking out an auto loan, paying $300 a month is certainly more appealing than $400. However, the only way that can be done is extending the loan term, since the overall price of the vehicle won’t change.

So, you may be tempted to stretch a loan term out to five or six years. But, that’s not recommended when it comes to interest. The longer you pay off a loan, the more interest you’ll pay. What started off as a nice $300 a month could well exceed the $400 that you didn’t want to originally pay.

Ideally, you want to get a shorter loan term with higher monthly payments, but lower interest rates.

3. APPLY A DOWN PAYMENT AND/OR TRADE-IN.

A great way to keep both your interest rate and monthly payments low is by applying a down payment and/or trade-in right from the beginning.

If you want to put money down, it’s recommended to put as close to 20% of the new car’s cost down. Not only will your monthly payments be lower, but you’ll also have a better chance of getting a low interest rate. And a low rate means you’ll be paying less in total interest over the entire length of a loan.
If you can’t hit that 20% for a down payment, then a trade-in might help you out. When you trade in a car to a dealership, you’ll get a certain amount of money based on several factors, like:
• Mileage
• Type of automobile
• Vehicle condition
A staff member at the dealer will APPRAISE YOUR VEHICLE, and give you a set amount of money. If your car is clean and properly maintained, then that value will go up. Once you’re given the trade-in value, you can apply that money to your auto loan, which will result in lower monthly payments.

CONTACT US FOR MORE INFORMATION

IF YOU NEED MORE INFORMATION ON HOW TO FINANCE A CAR NEAR NORTH ANDOVER, PEABODY, OR DANVERS, THEN CONTACT US AT IRA LEXUS OF DANVERS. AND WHEN YOU’RE READY TO TAKE OUT AN AUTO LOAN ON A NEW CAR, THE EXPERTS AT OUR FINANCE CENTER WILL HELP YOU OUT.

SO, DON’T WAIT. CONTACT US TODAY!