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..
