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Understanding Car Financing

You want to get the pre-owned car that is right for you and for your budget. We at Peters Auto Mall want to help you do exactly that! We offer a wide selection of vehicles and reasonable prices that suit almost any bank account.

Yet in order to drive off the lot in your dream car, you need to understand how car financing can work best for you.

understanding car financingEssential Car Financing Terms

APR – Annual Percentage Rate, the cost of the credit extended to you
Down Payment – the total of the value of your trade-in vehicle plus any cash you can provide
Equity – the difference between the payoff balance of your old vehicle and its actual value
Finance Charge – the total amount you will have to pay for the loan
Retail Installment Contract – your agreement with the seller that states the amount, the rate and the monthly payment
Stipulation – whatever action or documentation is required to meet the requirements of the transaction
Term – the total number of months you will be paying for the loan
Total of Payments – the full amount of principal, interest and fees you will have paid by the end of the contract
Total Sales Price – the full amount of the transaction including amount financed, down payment and finance charge

At Peters Auto Mall, our staff members will work with you to obtain the best possible car financing terms. Having the largest selection in the Triad means having plenty of financing options. With us, you can purchase the vehicle that best suits your lifestyle and budget!

Important Criteria for Car Financing

To begin with, creditors make their decisions according to four important criteria:
• Type of vehicle – including year of manufacture, odometer mileage and final price
• Personal information – including current income, employment verification and place and type of residence
• Credit history – credit score, which is based on making payments on time, debt level, number of credit accounts, amount of applications for more credit plus any liens or judgments
• Down payment– the total of cash plus trade-in value applied at the time of sale

To obtain the best car financing – which would be the highest total amount for the lowest interest rate – you should choose a car priced within your budget and make the highest down payment you can afford.

These actions will ensure that you get approved. You will also get the best overall deal, keeping your subsequent monthly payments at the lowest amount possible.

Monthly Payments

Your monthly payments are based on three factors:

• The total amount you borrow
• The total length of time over which you stretch out the payments
• The annual percentage rate (APR) you use to finance the loan

For example, let’s say that you borrow $17,500 for 60 months at ten percent. Your monthly payment would then be $372. If you made a larger down payment and only borrowed $15,750 for the same length of time at the same interest rate, your monthly payment would go down to $335.
Let’s say you can’t afford a larger down payment: borrowing $17,500 but stretching the car financing out for 66 months at the same ten percent would give you a $346 monthly payment, while keeping the loan for 60 months but getting it at nine percent results in a $363-per-month payment.

All in all, your down payment and the loan’s interest rate are the key factors in determining your monthly payment!