Set Yourself Up for Success with Your Next Auto Loan
Successfully navigating the auto purchase process, involves, choosing the right car, getting a good price, and funding the purchase in the way that makes the most sense for you. At Instant Financial Group, our vehicle loans will help you achieve your automotive needs in an easy and safe way.
This step is crucial and deserves attention prior to even looking for a vehicle. A loan has two components, as seen below:
Down Payment: The amount you pay up-front for a vehicle. The larger your down payment, the smaller your loan will be ( as well as the following monthly payments). Although a larger initial down payment may mean you’ll have to be more frugal in the short-run, you’ll appreciate the financial flexibility you’ll achieve in the long-run from smaller monthly payments.
Monthly Payments: After your down payment, you’ll continue to make smaller monthly payments on your vehicle. Make sure you are comfortable with the size of these payment amounts. When deciding your monthly payments, consider your income level could fall or you could face unexpected expenses in the years to come. Monthly payments at the top of your budget put you at risk–should your financial situation change. Also, remember to factor in your living expenses as well. You will have to cover those and your car loan.
Don’t Lose Perspective
With auto loans, perspective is EVERYTHING. Auto loans exist to help you meet an immediate automotive need, they should not be used to help you acquire a vehicle out of your financial reach. Below, are two dangerous scenarios that car buyers can fall into when perspective is lost:
Focusing on the Monthly Payment
Monthly payments can be very deceptive. For instance, if you take a four-year loan and stretch it over seven years, your monthly payments will be lower; however, you’ll end up paying more in interest costs. This increases the chances of you paying more than the car’s worth.
Focusing on the Vehicle and its Features
The budget for your auto loan should always be created prior to looking at vehicles. This helps you to only look at vehicles in your price range and prevents you from getting caught up in a certain vehicle or features that you can’t afford.