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4 Terms You Should Know Before Buying a Car

4 Terms You Should Know Before Buying a Car

Buying a car is a stressful thing for 
anyone, if it's your first time shopping   for your dream ride it can feel like lenders 
and dealers aren't even speaking your language.   Hi I'm Cesareo from OneAZ Credit 
Union and here are a few terms to   know before buying a car that will 
help you hit the roads stress-free.   The first term you need to know about 
is pre-approved. Getting pre-approved   is a great first step to buying a car if you're 
pre-approved for a car loan that means your lender   like OneAZ has checked your credit and approved 
you for a loan up to a certain dollar amount.   Pre-approval is conditional and does not 
mean you've secured the loan for your car.   Getting pre-approved gives you an idea of your 
spending limit and will help you figure out how   much you can afford to pay each month.

This 
can help you narrow down your search to fit   your budget and give you a little more negotiating 
power when you find the vehicle you'd like to buy.   Before buying a new car you'll also want to know 
about the interest rate. Behind your loan amount,   the interest rate is a second most important 
number you'll want to pay attention to for   a car loan. Basically higher interest rates 
equal higher monthly payments. The interest   rate is the loan amount the lender charges you 
for borrowing money and is represented as a   percentage of the loan amount. Interest rates are 
expressed as APR or the annual percentage rate.   Several factors go into your loan's interest rate 
including your credit score the loan term and even   the year of the vehicle. Joining a credit union 
like OneAZ gives you an exclusive discount on auto   loan rates.

That's because unlike national banks, 
credit unions are not for profit so we're able to   return our earnings back to you in the form of 
lower rates and fees. The third term you'll need   to know is loan term. The loan term is a length 
of time until you've paid off your new car.   Car loans are typically offered with 
the terms ranging from 36 to 84 months,   more expensive cars can even have terms up to 
a hundred months. Typically the longer the loan   term the higher your interest rate, however with 
longer terms your monthly payments will be lower.   A short loan term will save you money and 
interest in the long run but you'll be faced   with higher monthly payments.

Last but not least 
before you hit the road in your new ride you   need to understand depreciation. Depreciation 
is a decrease in value of your car over time   typically your car starts losing value the moment 
you drive off the lot. According to Carfax your   new car can lose as much as 10 percent of its 
value in the first month alone. A down payment can   help you avoid owing more on your car than it's 
worth depreciation becomes an issue if you sell   your car or if it's totaled or stolen leaving 
you owing more on it than it's worth. Keeping   your vehicle in good condition, logging thorough 
maintenance records, and not customizing your car   can make your vehicle more valuable when you go to 
sell it. Here at OneAZ Credit Union we want you to   have the knowledge to make healthy decisions about 
your finances. For more tools and guides about   auto loans, budgeting, saving, and more visit 
our financial resource guide at oneazcu.com..

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