When you’re looking to finance a car loan, your success depends on being prepared.
When it comes to finance a car loan, it is important to understand the terminology and the requirements behind it as you prepare. The car financing industry can sometimes be a confusing one, especially if you hear complex words and finance terms that mean nothing to a common customer.
When dealers and companies discuss vehicle financing with the customer, they often get confused. So, it is important to learn about the dealers or bank vocabulary. Make sure you understand these terms and know your numbers before you step onto the lot.
1. Know what you need to borrow.
The amount you need to borrow from the dealer or company is called the principle balance. It does not include your financing expenses and interest charges. It includes vehicle price, license fees, sales tax, and any other products that you may buy such as an extended warranty.
2. Know how much money you can put down.
Your down payment is the amount you’re prepared to put down right now. The upfront payment for the car, usually 10 to 20 % of the car's price. That amount is deducted from the principal balance.
3. Understand the finance term.
This is the time period of the loan. How many months do you want your loan to run? The longer the finance term, the lower the monthly payment, but the higher the total price you pay for your vehicle.
4. Research current interest rates.
The interest rate is a specific percentage paid to the bank by the customer for car financing. What rate are you hoping to get?
Before looking to finance a car loan, make sure to get familiar with important finance terms. Equally important, make sure you know what agreement you are prepared to make.
If you have questions about how to finance a car loan, ask the finance experts at University Motors for advice. Contact us here: www.universitycars.com/contact.html