People spend a lot of money on their cars. It’s usually their second-biggest expense after housing, and before other expenses like food, education and saving for retirement. Because cars are expensive, car buyers may choose to finance their purchase rather than pay in full. If done right, financing can be a good option. However, if you don’t do the research, you could end up paying more than what a vehicle is worth.
When shopping for a car, it’s important to get pre-approved for an auto loan before you go to the dealership. This can help you understand the terms of your financing and negotiate a better deal with dealers. Be sure to ask dealers about any manufacturer incentives, such as lower finance rates, that may be offered on certain models. Also, be wary of any “buy-here-pay-here” lender that offers in-house financing at a premium rate. These lenders can be less competitive and can use predatory lending practices.
When buying a new or used car, it’s important to consider how much you’ll need to borrow and the cost of credit on a yearly basis. The following calculators can help you find a payment that fits your budget and make the best decision for your financial situation. Enter the price of the vehicle, your down payment (if any), and the value of a trade-in if you have one. Then add the car loan’s annual percentage rate (APR) and loan length in months to see how much it will cost to buy a specific car over time. cars on finance