Here are some key things you should take note of before you decide to take a car loan. They include:
1. Choose the desired car specification. You need to know the exact specifications that you need or want in a car. Specifications such as colour, safety features, and automated gear, amongst others. Do you want a diesel or petrol running car? The answer to these questions will help you decide on the type of car you want and would help you reduce the amount of time you might waste in making your decision.
2. Know if you want a new or used car. Typically, new vehicles have the potential for a lower interest rate on auto loans and lower maintenance and repair costs compared to used cars. Although many people prefer a used car because it easily fits into their budget, you might also want to consider getting a new car.
3. Choose your type of lender. There are majorly 3 types of lenders that can help facilitate the financing of car loans. Banks, Credit unions, and dealerships. You will have to choose which amongst them you will prefer to finance your car loan.
4. Know the car loan down payment. Usually, you have to make a down payment which removes some risks for the lender and it also reduces how much you owe on the car. Down payments vary per organisation. At Autochek, we do a 30% down payment and you can take your car home.
5. Know which factors impact your car loan payment. No matter the type of lender you choose to obtain your car loan financing, it is important to understand how the terms of your loan will impact your monthly payment and the total cost of the loan. The longer-term loan repayment will lower your monthly payments but you may end up paying more in total over the life of the loan.
6. Know the length of the car loan. The duration of repayment for your car loan depends on the lender and it varies depending on your credit score. You will need to know for how long your repayment plan will last. It ranges from 12 months to 36 months.
7. Know if there is an Annual Percentage Rate(APR). This is the percentage you pay to the lender to finance your car loan although it is simply referred to as the interest rate mostly. The more risk the lender is taking to borrow you the money to finance your car loan, the more interest they will charge you.
Finally, plan your finances efficiently. Apart from paying monthly for your car loan, you will also have to maintain your car so it is important that your finances are well managed to be able to maintain your car.