Loan Cost
There are two basic parts to the cost of a car loan: the principal and the interest. The principal is the negotiated cost of the vehicle itself.
The interest refers to the total amount of the costs accrued over the life of the loan based on the principal amount and the stated interest rate.
Interest Rate
An interest rate is a basic rate charged to the borrower for the money loaned. The interest rate is normally expressed as a percentage for a one-year period and known as the annual percentage rate (APR).
Down Payment
The down payment is an upfront amount of cash paid by the borrower at the time of the purchase of the vehicle. It is usually expressed in terms of a percentage of the total price. It is not a legal requirement when taking out a car loan, but is almost always required by the lender.
Terms and Conditions
This refers to all of the other items that make up a car loan, including the term of the loan, normally stated in a number of months or years; insurance and registration requirements; loan payoff and resale terms; maintenance requirements; conditions regarding theft or accident; and conditions of loan default and repossession. There are many other such conditions, and a borrower is well advised to read them over carefully and have a clear understanding of what they mean before signing on.
Here are five basic steps you will likely follow in the process of securing a loan for your new vehicle:
Determine What You Can Afford
Get out a piece of paper and work out a realistic budget that tells you what you can afford in terms of a monthly payment. Then decide how long you are willing to have your loan last — the term of your loan. Next, determine the amount of the down payment you plan to make. The result will tell you how much car you can afford to buy.
Check Your Credit Score
It's important to know exactly where you stand in regard to your credit score before talking to lenders. Lenders rely on credit reports and scores when determining loan interest rates and terms. The higher your credit score, the better position you will be in to lock in a lower rate.
Shop Around for the Best Loan Deal
This is important since rates and terms will vary, sometimes considerably, between lenders. It's also important to look for the best loan deal before heading out to shop for a car.
Get Approved
Getting pre-approved for your loan means that you've set your limits before setting foot in a dealer's showroom where your emotions might get the best of you and your pocketbook. The best places to look for a pre-approved loan are banks and credit unions.
Shop for Your Car
Now it's time to visit your local auto dealers. Find the exact car you want. Then let your lender know the year, make, model, and Vehicle Identification Number. You will also need to purchase car insurance as soon as possible.
Business owners often think that if they can’t get a business loan from their bank, they’re out of luck. But that’s not the case. Business owners in need of financing have multiple options beyond the bank.
Proof of age
Identification proof
Application form
Passport size photograph
Proof of residence
Income proof
Bank statement
Signature verification proof
Pro-forma Invoice or Rate List
