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Auto Financing – 5 Things to Keep in Mind
Are you looking for an economic way to get yourself a car that won’t leave you penniless? Maybe you’re just tired of your old car and its’ unreliability? We’ve all been there and when cash is scarce it’s not easy purchasing a vehicle. Auto financing can be a great way to get a good car quickly, and when you’re careful the loan probably won’t be much of a heavy, long-time burden. If you’re looking for help and explanations of the sometimes confusing process of financing and paying back a car-loan this is the article for you! Here I’ll state the four most important things you should know about car loans:
What does it mean to be financed for a car loan?
Getting a direct loan from a bank or a finance company means that they lend you a set amount of money you agree to pay back with interest. Interest is the amount of additional money you’ll have to pay, and is often represented by APR – Annual Percentage Rate. The APR of your loan depends on the amount of money you’re borrowing and the length of the contract. This number is something you should take in to serious consideration and decide whether or not you have sufficient monthly income to pay back your loan.
How old do I have to be to be financed for a car?
Anyone 18 or older can get a car loan, as long as they can list a source of income and current occupation. Although there are surely reasons for an 18 year-old to have an expensive car, most of the time the loan just isn’t worth the financial stress you’re going to have to deal with… Waiting for a stable source of income is the smartest thing to do before applying for a car loan.
How long can I finance a new car?
Some contracts last for 24 months, and some last for upwards of 60 months. It’s vital to take in to consideration the APR when applying for a long-term loan, so as not to bite off more than you can chew. Financing a new car is definitely an expensive endeavor, and the length of the contract really impacts the amount you have to return. Let’s say you borrow 30,000$ for 24 months with an APR of 10%. That means that the total amount of money you have to pay back is 36,300$. The same 30,000$ with the same APR of 10% over 60 months sets you back 48,315$.
What does getting a co-signer mean?
If you have a lousy credit history it’s possible to have someone else co-sign your auto-loan to make up for your credit score deficiency. This makes the co-signer equally responsible for your loan, and the payment history will appear on both of your credit reports. It’s important to be careful when co-signing for someone, because a co-signer is legally obligated to pay the money back.