How to Choose the Right Financing Term
On average, used car shoppers spend more than eight hours researching vehicles online. It takes time to settle on the right make and model. Then after finding the right car, truck, or SUV, it’s all about making the deal. That’s why you’ve landed at CarUp KC. But even after you’ve decided which car to buy, there’s another decision to make. You need to choose the right financing term for your needs. It’s a necessity – as much as you’d like the process to all be over, you’ll need to get your car financing sorted out. Part of it is the decision on a financing term that suits your situation.
What Factors Are Involved in Choosing a Financing Term? Everyone has a unique financial situation. However, a few factors can help you choose what will work best for you.
Your Budget When you’re deciding on a financing term, it’s best to take the shortest term possible that has payments you can afford. You should have already determined what payment amount is comfortable, and one that you can fit into your lifestyle without affecting you much. Make sure you leave some wiggle room in your budget for unexpected expenses and expendable income. Otherwise, you’ll own a car but you won’t be able to afford to go anywhere!
The Interest Rate Your unique credit situation will determine the interest rate for which you qualify. If you have a fantastic credit score, you’ll have a lower interest rate. That means you’ll be able to shorten your financing term because you’ll be paying less interest overall. If you have a few blemishes on your credit report, the higher interest rate dictates you’ll need a longer term.
The Car’s Age Cars that are just a couple years old will qualify for longer financing terms, possibly up to 84 or 96 months. Older cars, though, may only qualify for 36 to 60 month terms. Whatever the case, the car’s age should influence which term you decide on. Consider choosing a term that reflects how much warranty coverage is on the powertrain. That way, if something expensive needs to be repaired after your warranty is over, you won’t be making car payments while paying for car repairs also.