Buying a car requires a substantial investment. For many Americans, it’s the second biggest expense after housing, and it’s a significant financial commitment that can affect your ability to save for other big expenses, like retirement.
Before you head to the dealership, take a look at your credit scores and monthly budget. Also, think about how much you can afford toward a down payment and whether you plan to trade in your current vehicle. You may want to consider optional add-ons, such as service contracts or credit insurance, that are often included in the total loan amount.
You can choose to finance your new or used car through any type of lender, including banks, credit unions, online lenders and even manufacturers’ financing groups. Compare loans to find the best terms, especially the annual percentage rate (APR) and loan term. The APR and loan term determine how much your monthly payment will be.
Typically, the longer the term of the loan, the more expensive the car will be. However, you’ll build equity over time, and at the end of the loan you should own a larger percentage of your car than what you still owe on it. This is in contrast to leasing, which essentially makes you a renter and gives you no ownership option at the end of the contract. cars on finance