Understanding Auto Loans: Robins Financial Credit Union

A car is a big purchase, which often
means borrowing money. So when you’re beginning the car buying
process, it’s important to understand some key auto-loan details and terms, and how these
factors can affect how much you’ll end up spending. We’ll start with an easy one: the down payment is the
amount of money you pay the dealer when you buy the car. The principal is the part of the car’s cost
that you haven’t paid yet – the amount of money you are borrowing
from the lender. Making a larger down payment reduces not just
your principal, but also the total cost of the car. Because when you pay the principal back, you
will pay it with interest. The interest rate is usually an
annual percentage rate, or APR. This is the percent added to your principal each year. So lowering your principal
(by making a larger down payment) or lowering your APR (by qualifying for a better rate) are two ways to reduce the interest you’ll owe,
and to lower your monthly payments. Another major factor in the total car cost
is the length of loan, or loan term. If you pay a loan back in two years, rather
than three years, the car is paid off sooner, which will increase your monthly payment,
but will decrease the total cost of the car. Other factors that affect the total cost are
the fees you may pay at the time of purchase. This may include tags, title, taxes,
and possibly dealer fees. These fees can often be folded into your loan
– which of course increases your principal and the total cost of the car. And that’s the story on auto loans! So, when you’re ready to apply for a loan
for your new car, our auto loan experts are ready to help…
at Robins Financial Credit Union. For more information call, click or visit
any of our branch locations.

One comment on “Understanding Auto Loans: Robins Financial Credit Union”

  1. ae4xo says:

    If you save $300 a month every 10 months you can upgrade to a newer car. By the time you do that 3-4 times, you can have a $10-$12K car without a loan

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