When shopping for a car, it is crucial to understand the different car loan terms available to you. It will help you find the deal on a best car loan and avoid being taken advantage of by unscrupulous lenders. This blog post will discuss some of the essential car loan terms that you should know. We will also provide tips on how to get the best deal on a car loan. So, if you are in the market for a new vehicle, be sure to read this blog post!
Car Loan Terms You Should Know About
1. Annual Percentage Rate (APR): Your auto loan interest rate is the most important factor determining how much you’ll pay for your monthly car payments. Use an auto loan calculator to see what it will look like with different numbers and settings.
2. Upside Down: This is the unfortunate position that occurs when you owe more on your auto loan than what it’s worth. Vehicles depreciate significantly during their first few years. If a person buys something new like an expensive car or truck, they may find themselves upside down on their loan within a few years
3. Blue Book Value: Think of the Kelley Blue Book as your guide to pricing on used cars. It’s important because it tells you what other people are asking for their old models and can help determine if trade-in value is fair or not.
4. Upfront Costs: The total cost of buying your vehicle includes a down payment, first month’s payment, and fees. There is a sales tax that you must pay on top of it all, which can vary depending upon where in the country you live.
5. Down Payment: A down payment is something that you provide to your lender so they can reduce the amount of money owed. It’s not always required, but 10% – 20% should be enough for qualified buyers and keep monthly payments affordable. A great way to save on interest when buying a car would be to put more than required for the down payment.
6. Trade-In Value: When buying a new car, many people will trade in their old one at the dealership for an amount that’s usually lower than what they could get if selling it on their own.
7. GAP Insurance: Theft or total loss of a car can be financially devastating. But with Guaranteed Asset Protection (GAP) insurance, you protect yourself from being victimized. It makes sure that there is enough money set aside to pay off any outstanding loans on your vehicle should it get stolen.
8. Term: The length of your auto loan will determine how often you can make payments, what interest rates are applied to the transaction, and when repayment must be completed.
9. MSRP: When you look at a car and see the window sticker, which lists all its standard features with any optional ones. In general, buyers can negotiate below what’s quoted on this price list.
According to Lantern by SoFi, “Choose a loan offer, and on final approval, enjoy the extra cash in your pocket. It’s that simple!” When it comes to refinancing a car loan, they’ve got you covered.