What is Auto Financing
Imagine you’ve just bought a new car but can only come up with half the cash up front. That’s where auto financing, or car loans, can come to your rescue!
The term “financing” refers to borrowing money for an asset like a car or home. Keep in mind that auto financing is not the same as leasing – when you lease a vehicle, you only make lease payments and don't have any ownership of the vehicle at all. So, it's important to understand the different types of auto financing and what they mean for your financial health.
First, you should know, financing a car adds to the total cost of the vehicle. Interest and other loan costs are added, but in exchange, you don't have to pay the full cost of the vehicle upfront.
When you take out a car loan (also known as financing a vehicle), there are 3 things to consider. The loan amount (the total amount you're borrowing to get the car), the APR (annual percentage rate, also known as the amount of interest you'll pay), and the loan term (the amount of time you have to pay back the loan).
Be aware that interest rates are usually higher when purchasing a used car over a new one, and be on the lookout for prepayment penalties. If possible, select a loan that doesn't have a prepayment penalty, so you won't be negatively impacted if you decide to pay off your loan earlier than the term states.
Our easy-to-use online calculator can help you find the right auto loan in less than 30 seconds! We can help you find a loan with competitive interest rates, rewards, and best of all, financed by a community financial institution, which is a better alternative to megabanks.
Fill out our simple form to find your auto loan today.