Car Financing 101

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• When shopping for a new or used vehicle, how am
  I going to pay for this? is just as important a
  question to ask yourself as, what kind of car do
  I want? For most people, paying the entire cost
  of a new car upfront simply isnt an option. In
  order to buy that new car, truck, or SUV, most
  people turn to car financing to cover the costs.

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• Car financing is the process of taking out a
  loan to pay for a new or used car. In exchange
  for the loan, the car buyer agrees to pay back
  the lender the full price plus interest, over a
  given amount of time. Financing a car can be done
  through banks, credit unions, and similar
  financial institutions, or through the dealership
  where a car is purchased.

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• Until the entirety of the loan and interest are
  paid, a car purchased with financing technically
  belongs to the lender. The title for the car will
  not be turned over to the person driving it until
  all payments have been completed. If payments are
  not made or are consistently late, the title
  holder can repossess the vehicle.

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• Because of this, it is very important to select
  the right financing options when looking at new
  or used cars for sale. In addition to the loan
  principle (i.e., the amount of money borrowed),
  car shoppers need to keep the following factors
  in mind
• Interest rate
• The loan term (i.e., the length of the repayment
  schedule)
• Monthly payment amount

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• Charging an interest rate is how lenders make
  money on their loans. A loan agreements interest
  rate will vary depending on a persons credit
  score, which is what lenders use to determine
  whether or not someone is a good risk. Generally,
  getting the best interest rates requires having a
  credit score of 720 or higher.

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• In addition to principle and interest rate, a
  loan agreement will also have a set period of
  time (5 years, 7 years, etc.) in which the loan
  must be paid off that is the loan term. Loans
  with shorter terms need to be paid off faster,
  which usually means higher monthly payments.
  Longer term loans usually cost less per payment,
  but end up accruing more interest that will need
  to be paid off.

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• Most car loans have required monthly payments.
  The principle, interest rate, and term of the
  loan will all affect how large these monthly
  payments are. As a general rule, car buyers
  should not take out a loan that requires monthly
  payments amounting to more than 20 of their
  monthly income.

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• To get the best deals on financing a new car
  sale, car shoppers should
• Shop around different institutions will offer
  different loan rates. Dont just settle on the
  first offer. Get proposals from the dealership
  and multiple financial institutions.
• Raise their credit score paying off debt 6 to 9
  months before applying for a loan can bump up
  your credit score, which can result in more
  favorable interest rates.
• Keep trying if a car loan application gets
  rejected, dont give up. Keep trying until you
  find a lender who will offer you acceptable terms.

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• Desert Sun Auto Group is New Mexicos most
  reliable new and used car dealership. We are
  committed to offering our customers the best new
  and used vehicles available and to making the
  purchasing process as simple and pain-free as
  possible. For more information, please visit
  www.desertsunmotors.com.