![]() Choosing fewer number of months will increase your monthly payment, but you will pay less interest over the life of the loan. The number of months determines how long you will be paying on the loan until your vehicle is paid off. Number of Months: The length of the loan is also referred to as the loan term.Either way, you will save interest expense the more you put down. Applying a larger down payment can either lower your monthly payment or shorten the term of the loan. Down Payment: This is the amount of cash you will be applying toward the purchase of the vehicle.The higher interest loan would cost $1,492.80 more than the lower rate loan. A slightly higher interest rate may not appear to increase your monthly payment by much, but your financing cost increases significantly.Įxample of an Auto Loan with Different Interest Rates. The lower your interest rate, the lower your monthly payments will be. Negotiate the the lowest rate possible to make your new car as affordable as possible. ![]() Interest Rate: The annual interest rate on the loan for the vehicle.A car with negative trade-in equity is referred to as "upside down" when the loan principal is higher than the value of the vehicle. This amount can be either negative or positive. Trade-in Equity: This is difference between what you owe on your trade-in and what the dealership is willing to offer you.Depending on where you live, sales tax can add a significant amount to your purchase price. ![]()
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