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How Financing Works
When you purchase a new vehicle you must first look at how
much money you will put down (typically the higher the down payment,
the more creditable you look in the eyes of the financing source). A down
payment of a couple thousand dollars or more in the form of cash, factory
rebates, and/or trade-in is suggested to help lower hefty interest charges
on the money borrowed for the vehicle. If you are trading- in a car, research
its market value at www.kbb.com
or take it to a few used car dealers to get an accurate amount of its
worth.
Often finance terms run around 4 or 5 years, (this is the
amount of time you have to pay off the loan to obtain the title of the
vehicle). Importantly, while you are paying off your car loan the vehicle
is officially titled to your financing source. If you fail to make the
monthly payments they can legally repossess the vehicle from you.
Often manufactures offer special financing on different
vehicles lines periodically and recent college grads are usually given
reduced finance rates and special cash offers. However your credit rating
will play a heavy factor in determining your applicable finance rate.
Advantages
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Ownership - Unlike leasing, financing gives you
the satisfaction of owning your vehicle. There are no restrictions
on the amount of miles you can drive or modifications you can make
to the car; however, these factors will affect its market value. For
those who prefer to spend their money in return for an asset, financing
may be the best option.
Disadvantages
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Ownership - As your vehicle goes out of warranty
you will be responsible for all needed repairs, which can quickly
add up.
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Affordability - With leasing you can afford to
get into a more expensive car as compared to financing. Therefore,
you will have more out of pocket expense with the monthly car payment,
which will force you to drive what you can afford.
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Design Changes - Your new car may look
out- dated in a couple of years causing you to want the newest model.
Based on your monthly payment and condition of the vehicle, you may
pay dearly if you try to trade it in early due to negative equity.
Visit ASEC to Determine Payments |
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