Blog Challenge: Bria B.

Game of Loans: How You Know A Car Loan Is Right For You 

A form of independence is having a reliable ride going to and from. But this goal could be somewhat a hard task if you don’t have the funds to do it by yourself. Don’t fret! You haven’t thought of all your options, here’s when a car loan could come into play. Yes I said it, a car loan!

*PUBLIC SERVICE ANNOUNCEMENT* 

Prior to making a choice please do your homework before deciding what loan option is best for you. ALWAYS ask questions if you aren’t sold on the terms and conditions. The worst thing you want to do is commit to something and later on find out it’s not what you thought. 

Getting a loan is more than receiving money to help offset the cost, first you must determine what you can afford. This goes beyond the car itself. How will this loan factor with your monthly budget? 

  • Gas 
  • Insurance 
  • Maintenance
  • etc.

A tool to help with this is True Cost to Own Calculator. TCO allows you to calculate an estimated amount for other costs as mentioned above. 

Who. What. Where?

Car loans can come from multiple places: credit unions, banks and car dealers. Explore what each has to offer and figure out which works best.  

With banks and credit union offers, check APRs (annual percentage rate) on the loans. This determines the amount of interest on your total loan amount. The lower the APR could translate to lower monthly payments. Credit scores play a major part in this. The better your credit score, the lower interest rate you’ll qualify for. 

Loan Limit. 

Know the length of your car loan. The longer the length, interest rates will increase. A car loan recommended length should be between 36 to 60 months. Majority lengths of a new car loan is around 65 months. 

Is it really a deal from the dealer?

Financing through car dealers could be quick and somewhat easy but it’s not always affordable. Don’t let those special offers fool you, be aware. Some options with financing could include Credit Insurance (helps pay off your loan if a death occurs, you become disabled or unemployed) and Guaranteed Auto Protection (covers the difference between actual cash value of a damaged or stolen vehicle and amount owed on the car). 

One last thing: remember to make your payments ON TIME. DO NOT miss payments, it could hurt you in the long run.

Is a car loan for everyone, probably not. However, hopefully reading this blog has confirmed or made you want to do a bit more research before you make your decision. 

Keeping you financially aware, 

Bria