What to Know When Financing a Vehicle

By Street Toyota on December 18, 2013 in Tips & Information

When purchasing a vehicle, a few little details make all the difference financially. If you intend on taking out a loan to purchase your next vehicle, then this article is for you. We want to make sure you have all the information necessary to get the best deal out there.

Factors in Loan Rate

Screen Shot 2013-12-18 at 2.12.30 PMAutomotive loans generally span across 36 to 72 monthly payments. While this might be considered standard, the shorter the length of the loan, the lower the rate. Surprisingly, the model year could help you reduce loan rates as well. The newer the vehicle, the lower the rate.

While both the length of the loan and the year of the vehicle are important, personal history holds the most weight of them all. Length of employment, credit history, income and expenses will be used in credit scoring as well. A high credit score will allow you to negotiate a reduced loan rate, regardless of where you borrow money.

Financing Through the Dealership

You bring your information and yourself; the dealership takes care of the rest. A credit application will always be reqScreen Shot 2013-12-18 at 2.12.15 PMuired by a dealership when using their financing. Your credit score is used to determine monthly payment amounts and the finance charge. Factors that determine these amounts are the negotiated price of the vehicle, sales tax, title, and licensing fees. Be sure to look at your preferred dealerships website to use their online credit approval.

If you’re not in the market for buying a vehicle, the option to lease is always available.

Vehicle Leasing

A lease allows a vehicle to be used for a fixed period of time at a fixed rate that is agreed upon. The agreement Screen Shot 2013-12-18 at 2.12.22 PMgenerally lasts two to four years and includes a limit on the number of miles driven. At the end of a lease, the vehicle is returned to or purchased from the leasing company. The vehicle can be purchased for a residual price; this price will be included in the contract and can be negotiated.

We hope this explanation of financing options will allow you to hold on to some extra money the next time you’re in the market for a vehicle. Be sure to LIKE US on Facebook and FOLLOW US on Twitter for the latest at Street Toyota in Amarillo, Texas.

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