Automobile lending at a glance
Posted on Tuesday, September 20, 2016 at 8:22:03 PM
Interest rate is very important, but no more important than whether or not you are over-buying. Can you afford your monthly payment, and will your overall budget remain intact? The price of the vehicle matters.
Are you buying a $40,000 vehicle when you should probably be purchasing a $20,000 vehicle? Don't let your heart or preference win out over your head.
Rates are still very low, especially for new vehicles. New vehicles cost more, and loans that are usually extended over a longer period of time to keep the payment low may not be such a "great deal" after all.
The key factor is the total amount paid at the time the loan ends. You could end up paying more for that newer vehicle financed at 1.9 percent over 84 months than a cheaper, but older vehicle financed at 3.9 percent for 60 months.
When shopping rates, make sure you are also look at the big picture, which is the total of those payments when all is said and done. Used vehicles may also be more reliable than a brand new model, and some carry original manufacturers' warranties or extended warranty products on top of that at an additional charge.
Time to get out that pro vs. con list again!
So get out there and get that new ride. It is a great time to buy. A lot of end year selection, great rates and dealer competition make the auto industry continue to be a buyer's market.
As always, happy and safe driving!