Broker Check
What to Know Before Financing a Car

What to Know Before Financing a Car

September 07, 2023

Buying a car can be an exciting experience. Deciding what type of car fits your needs the best, picking out the features you have to have – all crucial decisions to make. But have you thought about how you’re going to finance this new car? Here are a few things you need to know before walking into that dealership.

Understanding Interest Rates

Interest can significantly impact the total cost of financing a car. Most loans calculate interest rates using an annual percentage rate (APR), which represents the cost of borrowing over one year. Generally, the lower the APR, the less you spend over the life of the loan.

  • Shop around - you may get a better rate from one dealership over another
  • Look at the loan terms - don’t get stuck with early repayment fees
  • Consider pre-approval - you could get pre-approved from a bank or credit union before going to the dealership

Leasing vs. Financing

Financing a car means you…

  • Purchase it with a loan
  • Own the car once the loan is paid off
  • Can modify the car (paint, body work, etc.)
  • Typically have higher monthly payments
  • Can sell or trade in your vehicle at any time

Leasing a car means you…

  • Pay to use the car for a set period of time
  • Don’t own the car and must return it at lease-end
  • Have restrictions on mileage and wear and tear
  • Typically have lower monthly payments
  • Can’t end the lease early

It’s good to do some thorough research on your desired vehicle and the best rates before you venture into a dealership. Going in prepared can help you get the best price possible for your new vehicle. If you’d like help determining your options for financing or purchasing a vehicle, contact the office.

This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.