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What to Consider for Your Auto Loan

Posted by Elise Norris on 03/28/2019
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A car is a big purchase. And since most people choose to pay it off over time, it is also a big commitment. It is very important to understand your finances in order to set up a healthy auto loan.

 

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Interest rate: Knowing what interest rate you qualify for is determinant of each individual person. Your Annual Percentage Rate (APR) is a big factor in knowing how much your car will cost you.

Loan Length: The length of your loan is completely up to you but just know that the shorter the length of the loan, the lower the cost of interest will be but your monthly payments will be higher. If the loan length is longer then you will pay more in interest but your monthly payments will be cheaper.

Determining Your Monthly Payment: The fixed amount you pay each month should be determined specifically on your own finances. Make sure that you are choosing a reasonable amount for your budget but also that you are paying off the car in a reasonable amount of time as well.

Keep the End Payment in Mind: When you are purchasing a vehicle make sure you are thinking about the interest rate and other miscellaneous fees associated with buying a car, not just the price tag. Consider oil changes, tire changes, potential breakdowns, trips to the local repair shop, or even a wreck before you purchase your vehicle. After all these are considered make sure that you can still pay off your vehicle under your budget in a timely manner.

Topics: Making a Big Purchase, Managing Your Money, Saving for the Future, advice for members